Jumbo Modifications

A residential property where the first loan was more than around $729,750 at the time of the default is not eligible for modification under the Making Home Affordable program.

However, home owners with jumbo-size loans should not despair – especially if their home is under water. Many lenders will modify.

Consider this modification in which the owners owed $1.078 million. They received a Making Home Affordable like modification in which their rate was reduced to 2.0% for five years, then 3.0% for one more year, with a probable permanent rate thereafter of under 4.0%. The amortization was 40 years.

And they received a principal reduction of $316,000!

The servicer is Ocwen, and the trial payment program is here. The final modification is here.

The key to the modification is this: The property is now worth only around $700,000. The principal reduction down to around $761,000 was not unreasonable, given the fact that the interest rate was reduced enough to more than compensate the owners over the years.

And the modification was not unreasonable for the investor-owner of the mortgage. Otherwise the investor would have had a foreclosure on its hands.

If you are in a jumbo modification situation, my advice to you is this: Persist. And contact us at 425-771-1110. We only work on Washington properties. If you are in another state, you would have to have a “sponsoring attorney” in your own state.

James

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