I’m in the final phase of a modified mortgage with Citi. What can I expect?

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I understand that some of the possible reduction of capital by lowering interest rates, elimination of late fees, Thu, etc., they really give you those things?

  1. Reply
    Paul in San Francisco
    February 7, 2011 at 12:56 pm

    All of those kinds of extra “fees” imposed by lenders in the modification process are completely negotiable. Unfortunately, lenders tack on these little “fees” at the very end of the modification process and before you have time to object, it’s too late. This is what you should do: (1) Call your escrow/title company and request an “estimated settlement statement.” This will be a draft of your settlement statement. A settlement statement is simply a a line item list of each and every cost and credit incurred by the borrower in the modification process. Several days prior to the close of the modification, ask your escrow/title company to provide you with an estimated settlement statement. Examine what items are listed. Ask ALL PARTIES, ESPECIALLY YOUR LENDER, if there are going to be any additional costs/services/fees, etc. prior to close of escrow and, if so, they should let you know now. Tell the parties that you will not pay any costs/services/fees that they incur without your consent. Use this as a tool to get everyone to let you know what kind of $ $ you’re going to have to put out. Do not use this as a tool to slow down or undermine the modification process, however.

    Hope this helps. My advice is worth what you paid for it!

  2. Reply
    gerald ortiz
    February 7, 2011 at 1:01 pm

    Typically the lender will do everything you mentioned except for the principal reduction. You must remember that your lender gets paid on the interest they accrue off the principal you borrowed. A modification will lower the interest rate to lower the payment. While neither option is preferred by the bank, if given a choice between the two, they will often choose modification. At least this way, they can still earn money on the entire principal as opposed to reducing your loan to market value and losing out on both principal and interest. Any fees or arrears you may have typically get absorbed back into the loan.

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