Well yes. A loan modification is typically permanent. It is when the bank changes the terms of the loan. Which is perfectly legal. A mortgage is a contract between the homeowner and the bank. And it can be changed if both parties agree.
Why would a bank do it? It depends on the sitaution. If someone is laid off but now has a new stable job but lost $400 a month in income, the bank may be willing to do a loan modification. They may wipe off interest or write off negative equity to lower the payments to something the homeowner can afford. It may be in the bank’s best interest to do this because if a house is very far underwater, they could end up out hundreds of thousands of dollars if the homeowner walks away.
The stimulus money was supposed to go to the banks to help remodify some of these really bad loans. The problem is, the banks took the money and kept it. And they really havnt done much modifying nor are they making very many new loans. The banks are sitting on the cash. And that’s one reason the stimulus has failed miserably.
Sure the homeowners that took out these loans share blame for this housing crisis. But the banks and the government are just as much to blame for it.
Warren Buffett is the major holder of Wells Fargo.. I wouldn’t go near that bank for anything..
Well by all means Yes yes yes! Let’s just wipe out 30% of the balance off ALL loans, we are a nation of laws I believe and no individual has more property rights than the next (except banks and business in general...those bad guys who employ!).
And we all know that a 90 day loan modification is good for 30 years! To hell with the both parties agree thingy...if a borrower cannot pay, make the banks give up their property. No due process, just a “legal” taking or rather confiscation.
We are progressing very quickly into our communist nirvana, how proud we must all be.