Predatory loan mod with intrest rate hike and balloon?

Down_with_Suntrust

LoanSafe Member
Jan 23, 2010
26
0
1
I have filed ch7 (aug 2012) to release alot of really bad debt, and decided to keep my primary residence. The home is worth around 270k, I owe approximately 320k, Suntrust modified me in late 2010, here is how it went

Interest reduced to 2% on 40 year term, interest rate hike every two years to 3.5 percent and balloon of 43k due at 40 year mark.
I am deathly afraid of this coming rate hike, As I am unemployed and low on cash, everything else I owned I let go, but I need to keep this home. I feel it was predatory to Make a loan mod that did not improve my situation at all, it only prolongs the problem of the underwater house.

My initial payment was 2388.00 monthly. then modified to 1231.00, then servicer claims when I missed payments it shorted my escrow account, so they added 200 more to my payment to 1422.00. I counterclaimed The escrow shortage should have been calculated into the mod not added on after.

I am seriously looking into filing a lawsuit against suntrust who modded me into a disfunctional mortgage, but they sold servicing to nationstar who wont budge. Am I better to negotiate after discharge, or go after suntrust who modded the loan....seriously confused. After the rate hike my mortgage will increase again and Im scared. Help?
 

Cat Damiano

Mortgage Wars
Sep 10, 2007
10,541
39
48
Colorado
www.loansafe.org
I have filed ch7 (aug 2012) to release alot of really bad debt, and decided to keep my primary residence. The home is worth around 270k, I owe approximately 320k, Suntrust modified me in late 2010, here is how it went

Interest reduced to 2% on 40 year term, interest rate hike every two years to 3.5 percent and balloon of 43k due at 40 year mark.
I am deathly afraid of this coming rate hike, As I am unemployed and low on cash, everything else I owned I let go, but I need to keep this home. I feel it was predatory to Make a loan mod that did not improve my situation at all, it only prolongs the problem of the underwater house.

My initial payment was 2388.00 monthly. then modified to 1231.00, then servicer claims when I missed payments it shorted my escrow account, so they added 200 more to my payment to 1422.00. I counterclaimed The escrow shortage should have been calculated into the mod not added on after.

I am seriously looking into filing a lawsuit against suntrust who modded me into a disfunctional mortgage, but they sold servicing to nationstar who wont budge. Am I better to negotiate after discharge, or go after suntrust who modded the loan....seriously confused. After the rate hike my mortgage will increase again and Im scared. Help?
Under certain circumstances the lender is unable to capitalize escrow shortages and will either offer a payment plan or to pay it off in one payment. A modification is only able to get the borrower to a more affordable payment, that is the goal. You received a modification that reduced your payment by nearly 50 percent, that is more than most. You can't even refi an underwater home down to 2 percent. Were you unemployed when you modified the loan? What state are you located in?
 

Down_with_Suntrust

LoanSafe Member
Jan 23, 2010
26
0
1
The home is in maryland. I was employed as a salaried position. I think it is predatory because when the interest rate climbs the payment will be more than 31 percent of my income then, and with the 250 added thru escrow Im back to a un-afordable payment. I am currently seeking an attorney to find out what can be done in this situation. In my opinion it is predatory to take a fixed rate loan and make it into a product similar to an arm all while property values here continue to fall , the correct way would have been a principal reduction instead. by the way this was an in house mod because i was denied by hamp twice before this mod. This was a home i could afford, at the time my income was great, it was all real estate based income. my current situation is quite different.
 

Cat Damiano

Mortgage Wars
Sep 10, 2007
10,541
39
48
Colorado
www.loansafe.org
Unfortunately a modification is to lower the payment to a more affordable level, the principal reductions we are seeing are from the DOJ settlement modification program only.
What was your fixed interest rate at? What interest rate does the modification cap at for the remainder of the loan does it cap at 3.5 percent fixed for the remainder? Is the cap rate much higher than your original fixed interest rate? Modifications are not predatory loans, they are modifying the original loan to make the payment more affordable. If you are now unemployed, then your circumstances have changed and you should try to reapply.
 
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Down_with_Suntrust

LoanSafe Member
Jan 23, 2010
26
0
1
Unfortunately a modification is to lower the payment to a more affordable level, the principal reductions we are seeing are from the DOJ settlement modification program only.
What was your fixed interest rate at? What interest rate does the modification cap at for the remainder of the loan does it cap at 3.5 percent fixed for the remainder? Is the cap rate much higher than your original fixed interest rate? Modifications are not predatory loans, they are modifying the original loan to make the payment more affordable. If you are now unemployed, then your circumstances have changed and you should try to reapply
The mod should have been a fixed rate mod, why would an adjustable rate make sense for a distressed homeowner. the house has fallen in value since the mod was done, and they will never get 330k on the open market for it. I am looking into being represented based on the fact that this was a subprime loan to begin with, and I belive it an be proven as such.
 
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Cat Damiano

Mortgage Wars
Sep 10, 2007
10,541
39
48
Colorado
www.loansafe.org
The mod should have been a fixed rate mod, why would an adjustable rate make sense for a distressed homeowner. the house has fallen in value since the mod was done, and they will never get 330k on the open market for it. I am looking into being represented based on the fact that this was a subprime loan to begin with, and I belive it an be proven as such.
I wish you good luck with that, I do hope it all works out the way you are hoping for.