Why don’t mortgage companies modify loans before they are in default?

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I lost my income and have been paying my mortgage through my savings which are about to run out. I have a new job I will be starting but not enough to cover my existing payment. I asked my lender to modify my loan to help out otherwise I will go into default, but they said they only help after I have already been late on 2 payments (2 different lenders for my 1st and 2nd mort told me the same thing). Why do they reward people after they are late, forcing them to ruin their credit first? I contacted an attorney and he told me to purposely miss my next 2 payments before he can help me and that everyone is doing this. IS this the only way I can get help, to miss my payments? It seems like responsible people have to get screwed over in order to get help. My file should be in the frontline before I am FORCED to make a late payment, not in the back waiting til I make a late payment first!
Whether looking into government programs, directly to my lender or RE attorneys and modificatio companies, for the past 3 months they all tell me they can’t help unless I startt missing payments, that the longer I wait I’m only wasting my money continuing to make payments bec I can’t get modification help. I am really really angry about this and feel it’s not fair for slackers who purposely are missing their payments to get help. The system is set up to destroy us I am convinced! I guess I’ll start missing my payments too if that’s what I have to do. Maybe i”ll even go into foreclosure and get it over with since they won’t help me and I thought I was being good to make all my payments even though the value is worth half my mortg balance.

  1. Reply
    Tim K
    May 3, 2011 at 4:14 am

    This is a great question, actually. Banks/mortgage servicers, etc..are not able to modify a mortgage because modifying a mortgage is a breach of contract. that is why it is so hard to get this legislation through that is supposed to help “some” people. And when I say only “some” I mean only “some”.

    i would not advise taking your attorney’s advice, especially if he is not versed in real estate law. I can’t believe he told you to skip 2 payments. what an a$ $ .

    You need to check out your local government. Where I live you are able to apply for help with your mortgage payments. It is through the dept of job and family services. The program is called PRC. i am sure that you have this locally, or a program like it. Like it or not, your current prez is not going to come through with his promise on this one. Good luck.

  2. Reply
    Ed Atun
    May 3, 2011 at 4:50 am

    Because their job is to get the most money possible to the people who invested in the mortgages in the first place. They are real people who expect to get paid. When they loaned the money, they had no idea they could get wiped-out. They thought that a home loan was the single most secure investment in the history of money..

  3. Reply
    May 10, 2011 at 11:10 am

    I could have written your email! I rented out my home because I couldn’t afford it after my divorce. I pay 400 a month on top of the rent. My renters moved and I had paid one month ahead which is holding me over till June is due and I don’t have it re-rented. I called my bank (B of A) and 2 others and was told the EXACT same thing as you! I have excellent credit and work 2 jobs, support 3 kids, do not receive child support, and I’m taking 16 credit hours until I graduate in July. They want me to ruin my credit by making “2” late payments!!! And them I’m NOT even guaranteed they’ll modify my loan!!!!!

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