Homeowners May Face Adjusting Loan Mod Rates Beginning In 2014
With distressed Bay Area properties going the way of affordable rent, and prices in most areas still on the rise (or at least steady) most homeowners and others interested in real estate think that we have seen the last wave of distressed properties in our collective rear view mirrors.
Like the mirrors in a funhouse, the real estate view may be slightly distorted or even downright scary. Despite the fact that the economy in the hilly city and as well as Silicon Valley, Marin, etc continues to display robust numbers, many people overlook the scary loan mod adjustment monster that looms on the horizon.
Those with short memories will need a refresher to remember that not only did the real estate crisis start about 2009 but so did the loan modification craze. While many homeowners received 30 or 40 year fixed loan mods, many homeowners received five year loan mods, meaning that they adjust after five years. These adjustments will mean that many homeowners will not be able to afford the adjusted monthly payment.
We have spoken with many homeowners who have these loan mods that will begin adjusting in 2014. Many of these homeowners can see the writing on the wall. Most will not be able to pay the adjusting amount which will put them in awkward positions. Either underwater or with equity, these homeowners may not be able to pay their new adjusted mortgage.
Re-modifying Adjusting Loans
Can homeowners return to the bank for another loan mod? Banks have not been in the habit of re-modifying loans so that may not be an option. Unfortunately, these homes may be future examples of distressed equity sales.
Some prognosticators think that we may be in store for 11 more years of short sales, foreclosures, loan mods and the distressed properties. That may be a bit of a stretch however it may likely continue for at least five years.
Homeowners with soon to be adjusting loan modifications (2014, 2015) take note. Be proactive. Create a game plan for your home or investment property instead of waiting until the loan modification adjusts. Doing so will allow you to look yourself in the mirror and know that you did the right thing.
Anyone with question about how to approach their adjusting loan mod can feel free to contact me at email@example.com.