Is it possible to get a loan mod, and then another loan mod?

I do not want to short sell.  Most folks want to stay in their homes I know I do, and let inflation bail them out.  Am I dreaming?  Is it possible to get a loan mod, and then another loan mod?

Does the Hope Now program have a lot of promise? Is the following statement true about the Hope program?

The bank reduces your principal to 90% of what the house is worth today. The FHA guarantees a loan in this amount. You in turn must share any equity appreciation with HUD.

Tammy

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Hi Tammy,

According to the Hope Now website they are “an alliance between HUD approved counseling agents, servicers, investors and other mortgage market participants that provides free foreclosure prevention assistance”. 

What you are referring to is the “Hope For Homeowners” program (H4H).  A Los Angeles Times article dated November 5, 2008 titled: “Government’s mortgage relief program gets few takers” revealed the following:

“The federal government’s Hope for Homeowners program launched Oct. 1 was initially projected to help as many as 400,000 struggling borrowers avert foreclosure over the next three years.  But fewer than 100 homeowners applied for the program in October, and the Federal Housing Administration now projects that just 13,300 will be helped in its first year. An FHA official said at a mortgage industry conference recently that one large lender had reported that in a group of 23,000 troubled borrowers only 1,200 would be eligible for the program.”

And equally notable is the final paragraph:

“Plus, any borrower whose income was overstated on the application for the original loan is barred from the Hope for Homeowners program, regardless of whether they knowingly participated. That eliminates a large number of housing boom-era loans that allowed borrowers to state their income without verification.”

You ask: “Is it possible to get a loan mod, and then another loan mod?”  I will suggest the answer to that asymptotically approaches no; if the borrower re-defaulted on the first loan modification then it is doubtful (not impossible) that the lender would offer a second mod and with a recidivism rate on loan modifications of around 50%, half of all modified loans re-default.  A November 18, 2008 Marketwatch.com article titled “CORRECT: Modified mortgages often re-default” reports:

“For the industry in general, after mortgages are modified roughly 25% go delinquent again after just one post-modification payment and more than half end up delinquent after several post-modification payments”.

So, I’m not trying to be a downer – just a realist.  Make sure you get an affordable modification the first time around.  Otherwise, all that you’re doing is postponing the inevitable.

Thanks for the questions and hope this helps.

Paul