Should I accept my loan modification offer or counter?

LOAN MODIFICATION AGREEMENTFor the past few years I have helped thousands of people by teaching them to help themselves through my blogs, forums and emails. I really enjoy assisting my fellow Americans in a time of need and have found a great new career working from home.

Since becoming a full time consumer advocate and blogger in 2007,  I have found that one of the best teaching tools is to answer the questions I receive on my blog for the world to see and learn.

This morning I received this email and I though this exchange could help a few people out there that may have the same question.

from C*
dateSat, Jun 20, 2009 at 8:22 AM

subject: Your thoughtful Insight Needed

Greetings Moe,

I have read many of your different blogs on various websites.  Your passion for helping others is well documented.  If you don’t mind, I have almost completed my loan mod with American Home Mortgage.  I’m pleased with their first offer, but should I asked for more.  For example, could they wave the $500 Modification Fee?

I have listed below the details of my modification (my previous APR was 6.625%):

1st year APR 3.5%
2nd year APR 4.0%
3rd year APR 5.0%
4th year and beyond (25 yrs) APR 5.5%

Also, I have 2 months mortgages payments rolled up into the loan.

Our insight is greatly appreciated.


To: C*

dateMon, Jun 22, 2009 at 6:51 AM
subject Re: Your thoughtful Insight Needed

My answer:

Hello Cordie and thanks for the email!

This looks like a great offer. If you can afford this modification long term, then I advise you might want to accept it. As far as the $500 modification fee, many mortgage servicers do have these fees added in to handle their costs associated with processing your loan modification.

What upsets me is the fact that they get an additional $1500 from the US government and they still have their hands our for more money from homeowners. But I am not surprised to say the least.

By all means, you can counter this offer and do not have to take it. I have seen some people get better offers by doing this. I have also witnessed homeowners who countered the offer on the table, as the current offer expired, only to never receive another loan modification. Sadly, they ended up losing their homes.

If you counter or deny this offer, you run the risk of losing it and maybe all offers in the future. But do not take an unaffordable loan modification because you feel pressured to accept it. If you can’t afford it, then fight for better!

Loan modifications are what the industry calls a privilege and are not mandatory. You being an American, you have the right to choose what is best for you and your life.

With that being said, lets end this with an old country song by the great singer Kenny Rogers, “You gotta know when to hold em, know when to fold em, know when to walk away, know when to run!”

I wish you the best in all you do and choose!



Best Regards,

Moe Bedard

Posted in Mortgage Help | Tagged , , , | 23 Comments

23 Responses to “Should I accept my loan modification offer or counter?”

  1. Cesar says:

    i am going thru a loan modification with american home mortgage and they have sent me 3 loan agreements. the first agreement was not acceatable because the payment would be going up until i ended paying more than my original payment. the second one was not to clear and the third party that is so called helping me said after 5 years the bank would raise the payment to whatever they wanted so they told me not to sign and resumit for the 3rd time. we now received the third agreement and the payment is more than the original payment and it will continue to increase for the next 3 years. i had requested interest only and i have paid my taxes and insurance and the bank gave me interest and principal and included taxes and insurance to my payment. can i resumit for a fourth time

  2. [...] Should I accept my loan modification offer or counter? [...]

  3. kate says:

    I don’t know where to turn for help or who to trust. I am behind on mortgage payments by about 6 months. I have been working with the local CDC authority (who is ‘working’ with the lender)(lender referred me to CDC). I received a loan mod offer with 6 days to answer the lender. It was decent. I responded by signing and the lender (Indy Mac bank for Deutsch Bank)declined to accept me. They said I could not prove my income (a rental unit in my home earns monthly income, but is currently empty pending this house resolution). Now, the lender has started the foreclosure procedure. I was served with summons (so was my ‘unnamed spouse’ who I didn’t even know at the time I purchased the house 5 years ago). I need to respond to this summons within the next 10 days. What do I need to include in my response letter in order to preserve any rights under the law that I may have? I paid $218K in 2004. My first mortgage (the MOST TOXIC in the industry according to Indy Mac representative) WAS $174,400, adjustable up to 9.25% (balance now $186+ due negative amortization) and the piggy-back second (Indy Mac for JP Morgan-Chase) is $21K, at 11.25%. My new husband and I both want to relocate within the year. We are willing to keep the house and rent it if it is sensible. How do we know whether we should try to keep it or just let go and take the loss?
    By the way, the second loan mod offer (stamped ‘Final Offer’) just came in the mail. Again they want a response within 6 days. The payment has now been reduced further to only $375/mo. P&I for first 5 years (at 3%). The 6th year at 4 % and the 7th year at %%, and finally the 8th and all remaining years (up to year 2034) at 5.25%. This part is great. It actually pays off about $51K, according to the lender’s package. And we can afford this, which is awesome. But the problem I have is understanding the two balloon payments, one for $96K (remaining principal) and one for $46K(misc.?). Balloon comes due at time of sale, or refinance, or final (30th) year 2034. Oh, yes, the county just listed new property appraisals for our area this week. The ‘comparable sales value’ is $142,700. The ‘just/market value’ is $127,633. Is there any reason to believe that the house will be worth keeping? (p.s. We have been told that the 2nd mortgage of $21K will not be addressed until the first mortgage is settled.
    What is going on here?) Many thanks for any help you can offer!!!


  4. Danielle Norris says:

    I have been attempting to get loan mod with Litton Loan Servicing since November, 2008. As of today, September 1, 2009, i was advised over the phone that they are placing us in a trial modification plan wherein they took the amount we were behind, placed it at the end of our loan and recalculated our payment at the same interest rate of 8.4%. So basically, our house payment will go up almost $400.00 per month, when we couldn’t afford the payment where it was. They have advised me that they do not have to participate in the Obama plan, but they took some of the bailout money. I have requested my entire mortgage file as well as the name of who owns my loan and I have not received that yet either. I don’t have thousands to give someone to try to work this out. I need advise.

  5. Victor says:

    I appreciate very much your dedication in helping us by explaining this complex matter.
    I have a question…
    Is it possible to get Bank’s approval for a Short Sale, when the property has already a Notice of Trustee Sale date?
    Thank you

  6. JASON says:

    I just received a loan modification offer that I don’t think is fair. I’m going from a fixed interest rate of 6.8% to an adjustable 3.5% for 5 years, then 6th year (unknown), 7th year (unknown) and …on until th 40th year where the amortization shows a single (last) payment of $50,0000. In addition, my current loan has not penalty for prepay and under this modication there will be a penalty. My current loan (40yr) principal is 270k. What will be my best counter offer?
    Thanks in advance for your help!

  7. Mark Vee says:

    I started a daily blog with what I am experiencing as I go through a modification with a third party. I hope this helps anyone that might have to go through this.

  8. Gail Smith says:


    We have been working with Wells Fargo since October 5, 2009, on a Loan Modification. We have been trying to speak with someone directly, but keep getting a different person every time we call. If is becoming frustrating. We finally received an offer which was crazy, it was called a Moremdum? where they give you Three months of NOT making your house payment, and then pay it all in the last month (IE.=Oct., Nov., Dec., No house payments due come January You have to pay them XXX amount of dollars in one lump sum, if you do this on time you can REAPPLY for the loan Modification Program, with no guarantee that you will qualify. The catch is if you cannot come up with the 3 months payment in one lump sum they can start forclosure on your property) Thats how I understand it. We did not accept this agreement. Do you think we should get more help and can you suggest anyone

  9. MARIO says:

    Moe, I’m trying to do a HAMP loan mod with national city mortgage and they are saying that the investor which is GMAC is not participating. How can I find out for sure or are there any other ways to qualify for the HAMP. I was on the home site and filled ot the qualifications and was told that based on my answers that I qualified.
    I need some direction on this, Please help!


  10. Tony says:

    I just received loan modification docs today from Wells Fargo. Wells fargo is giving me reduced payment basedon my trial payments for 7 months, then the loan reverts back to the old terms of my original note, and my original note is set to adjust in Jan 2011. I started the process in July 09 when I was 2 months delinquent. I completed my trial modification early and paid the December 1st payment in mid November. I have been calling every week since July. Every time I get a different person and in December I was told everything was fine. I called about making a January payment because I was waiting for my final modification to be approved only to find out my home was referred to foreclosure and an notice of default was filed on my home. They told me it was because I was 4 months behind (they did not take into consideration the trial mod payments I was making). I was informed my investor does not participate in HAMP so they can referr my house to foreclosure because I am on the Wells Special Modification plan. I guess I really have no choice but to sign the new term and get another 7 months in my house before I redefault. :(

  11. Sue says:

    I have not made a payment in 13 months. I paid a lawyer who had money back guarantee to get me a modification under HAMP. Bank of America gave me an offere called modification (getting the lawyer off the hook) but it only folded the unpaid 7 months of that time to my blance and my payment would have been $70 more, and was told that I don’t qualify for HAMp because of income and that my loan was not a Freddie or Fannie. I fought back, calling them on regular basis, providing same financial information over and over and finally 2 weeks ago in January I got a trial modification offer. It is now $70 less than my original payment but $46 of it is because my taxes were reduced so their offer is really only $23 less than my regular payment. They do not offer any explanation on how they reached this number. I am insulted by their offer but I can manage to make this trial modification period payment but the amount is not sustainable for the remaining loan term so I need to fight back but don’t know how to go about. Should I make the payment and say this is not acceptable or fight back before making any payment? Does anybody have similar experience. They issue reprots that they have offered trial modification to over 200,000 people but only 46,000 kept up with payment, I can see why. Their offers are rediculous and the whole claim of clarity statement, is non-sense, you can’t get any answers from the many pages they have sent and the customer service reads the same pages back to you. Please advise. Thanks.

  12. what the !@#$ says:

    Sue, how can you be insulted. You are lucky not to be out on the street. What did you do with all the money you did not spend on the mortgage?

  13. Ellen says:

    Hi Sue, I have BofA and was recently given a great modification loan. 5.0% fixed ending in a 5.5% fixed in 2017. My problem is I’m off work with a joint replacement surgery and won’t be returning until July. I’m tempted to accept it and eat beans to try to make the payment until I get back to work. Now, that is a gamble. If I don’t accept the modification, which is set for the next 7 yrs. I may not get another one, if I do accept it, what if I can’t make that 1 pymt. in June?

  14. Ellen says:


  15. Annie Fleming-Weaver says:

    I received an offer from Bank of America for a Loan Modification which included the same monthly payment of my origninal loan prior to my hardship. They reduced the interest rate from 6.75 down to 4.75 however included late fees and payments added due to trial modificatiion amounting to 16,000. If I push for a counter offer will I lose the ability to receive a permanent laon modification. There modification put me in the same position prior to the hardship. What recourse do I have?

  16. Deston Issa says:

    I received an offer from Wells Fargo for a Loan Modification which included a reduced monthly payment of $270.00 from my origninal loan. They reduced the interest rate from 6.75 down to 4.75, which however included late fees. I was originally given a Step Modification when I went through NACA and Wellsfargo of 2.25 for the first 5 years, 3.25 for year 6, 4.25 for year 7, and 4.75 for year 8 through year 30. To my surprise, when I completed the trial period, I was given just the year 8 interest rate and payment term, which is the reduction of the $270.00 from approximately 2400.00 to 2100.00. Should I push for a counter offer, since my loan is a Freddie Mac Loan. Also, if I push for a counter offer, will I lose the ability to receive a permanent laon modification? What recourse do I have?

  17. Cee'Cee says:

    We were already doing all the hoop jumping with Wells fargo: A trial period of 3 months and continued to pay the monthly trial period amount for several more months, when we proceded to file Chap.13 , (voided the 2nd mortgage) In which, Wells Fargo didn’t want to work with us to keep the first morgage and almost but a wrench in the Chap13 procedings. So finally WF assigned a loan officer to work on getting us a loan proposal (several in fact…many had mistakes), so finally a monthy pmt. amount (needed for PLAN approval) was approved by courts and the loan papers were signed and shipped off to WF and we proceded to pay the monthly amount of the plan that the courts approved. Well a couple of months after everything was done with Chap13 courts and all – WF decides that they don’t like the monthly amount or terms, and mail us another proposal, that does not match what they agreed with with the court. We’re stumped!!! Do we accept the new offer, with the chance that our Chap13 is compromised? Or not accept new proposal which may compromise a Home Mod. Loan? Completly and totally FED UP with all of it, but refused to give up on this. Please help.

  18. Karen says:

    I read many of the comments, alot which had similarities to my situation and it comes down to….do I make a payment while trying to work out a renegotiation on the modification or not pay. Should I suggest this is MY plan A, B or C and hope they will go for or come close to one, where are the answers to all these great questions posted….I need help fast, thanks everyone, hang tough.

  19. RETARD says:

    Counter offer HA. Take it and run you fool. My experience is that a few months after you accept your MOD you will lose your job or experience another set back. It’s Murphy’s law. Trust me I see it all the time.

  20. agnes says:

    am behind in my morgage payment for four month. I was inform that they were going to furclose on my home on first two months when I fail to make my monthly pament. I call and inform them a head of time that I lost my job. When I started working I call them and inform them. I told them I want to start to make some some monthly payment until I catch up with my mortagage bill I was told no. I have to pay every month the full amount. I then apply for the home modification. when I call was told they have all my papers that they have asked of me. After that whenever I call I was told to call back in ten days they have not yet process my paper. My plan is to still send them any amount I have for monthly payment because I do not want to loose my home. which am hoping they will accept. However few days I got a letter from the mortagage lawyer he want me pay all the money due or they will furclose on my home is that possible though am waiting for an answer about the home modication. I have two mortagage on my home. The second morgage has already modify my payment. Am waiting for the first mortagage. Please advice.

  21. Mr. Nice says:

    Agnes, 4 months and they are foreclosing? Where do you live, Beverly Hills? First of all you must be 3 full months behind before they file a Notice of Default. CHECK. It will take another few weeks to file a Notice of Trustee Sale. CHECK. Do you have a PRIVATE lender on the First mortgage? If you are paying the 2nd and not the 1st, I would be furious and foreclose, too.
    Who is your lender?
    Do you have equity?
    I think you are being scammed.

  22. Mawar says:

    Is the new HAMP.HOPE program that recently launced last Fall, 2010 really works? I did tried the modification back in 3/2009 that resulted with the run around from different departments and communication with 40 representatives. I hired a law firm that also did not get any result and charged $9000 for the loan modifications. Any suggestion, on the new prg. with principal correction as published in the news to start on 1-10-2011?

    Thank you.

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