Poof! Balloon Payment in Mortgage Pay-Off Vanishes

by Fred in Bothell WA, by Jane in Savannah GA, by Private in Middlesex County MA

Ask Kate when the balloon payment in your mortgage pay-off vanishes: Fred repeatedly asked his lender for a mortgage pay-off that includes the $265,000 balloon payment. To which his lender responded, There isn't one. Seems too good to be true. How can Fred verify his total pay-off?



Jane was told by the bank that her credit will not be affected by her husband's loan modification even though she was required to sign his paperwork. Is this true? Private from Middlesex County, Ma is trying to refinance a home with 75 percent equity and a 575 credit score. I offer possible alternatives.

Ask Kate: My HAMP Payoff Quote Doesn't Show Mortgage Balloon Payment

By Fred from Bothell, Washington

Poof! Balloon Payment in Mortgage Pay-Off Vanishes
Kate, I have asked my mortgage holder (Ocwen) for a payoff quote. They have provided a payoff quote but it does not show the balloon payment due at loan maturity.

So both my wife and I have called and asked about the balloon payment and they've said repeatedly that there isn't one.

We have only had the modification for about eight years so we wanted to know if we would still owe the full balloon amount or would it be a lesser amount because the loan is not at maturity. $265,000 is the balloon amount.

Thanks!

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Kate's Answer: My HAMP Payoff Quote Doesn't Show Mortgage Balloon Payment

Hi Fred,

If paying off a balloon is truly no longer a requirement, you might have received principal forgiveness.

You aren't alone in wondering this. In fact another homeowner, Luis from Miami, Florida, wrote me after his HELOC 2nd mortgage balance disappeared. See Unforeseen Mortgage Forgiveness: Notification of HELOC Lien Release.

Conversely, Raul in Burbank, CA forgot about his balloon payment... until his wife reminded him of a $313,000 lump sum that they still owed... HAMP Loan Modification: Principal Forbearance vs Principal Forgiveness.

How to Verify Your Balloon Payment's Balance


Bottom line, the best way to know if you have a lump sum balloon payment (and its specific terms) is to study not only the original HAMP loan documents you signed but also any correspondence that followed during the next 8 years.

In lieu of perusing the bank documents and corespondence, you could ask a local real estate agent for a referral to a title insurance company willing to pull property profiles at little to no charge. Depending on the last update, the report could possibly reflect a forgiven balloon payment, assuming the lender already sent in the corresponding paperwork to the county recorder.

If the property profile does not produce sufficient information, ask if a full blown title report would be more apt to provide answers. Don't forget to inquire into the expense.

More Help for Homeowners with Balloon Payment Mortgages


As Kenny Rogers sang, 'You got to know when to hold 'em, know when to fold 'em.' Read my answer to Tina in Coatesville, PA at... Caught In a Balloon Payment Mortgage.

When mortgage borrowers agree to balloon payments, they need to plan for the future. Read how to do this at Exit Strategy for Mortgage with Balloon Payment by Charlie in New Hampshire.

Best wishes,

Ask Kate

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Will HAMP Turned Into Deed in Lieu of Foreclosure Damage Credit of Non-Borrowing Spouse
by: Jane from Savannah, Georgia

My husband was approved for a HAMP loan modification. My name is not on the mortgage but I had to sign the modification paperwork along with him.

The bank reassured him I am in no way responsible, and my credit will not be affected.

He recently did a deed in lieu of foreclosure. There was a W9 and only he was required to sign that paper.

Please tell me what you think!

Hi Jane, Kate here...

I think every piece of paper requiring a signature needs to be fully read and understood, including the fine print. Verbal explanations are not reliable. So I hope the reassurance from your husband's bank is also in writing.

I suggest you get a credit report to see if your scores have been jeopardized by the modification and/or the deed in lieu of foreclosure.

Read more about Deed-in-Lieu of Foreclosure - HAFA Assistance by Trevor from Phoenix, Arizona.

Best wishes, Kate

$200,000 Income, No Debt, 575 Credit Score
by: Private from Middlesex County, MA

My income is $200,000 annually, I have no debt, own a 350,000 vacation home outright, and a great retirement plan. But I am having a difficult time getting a home mortgage.

It seems to have come down to my credit score being 575. Are there any options to get a mortgage for only 25 percent of the home value? Thanks for your help.

Hi Private, Kate here...

If you have no success at getting approved for a refinance, I have two suggestions. (You'll find help for turning around a loan denial at How to Cure Mortgage Approval Hiccups.)

Moving on, my first suggestion is mortgage loan modification. A modification amounts to redoing the terms of your current loan to make it more affordable. You will go through your loan servicer or lender to modify your mortgage.

But before you modify your mortgage, do consider this. Often, modification terms are inferior to a refinance. So my second suggestion is to take the time to improve your credit since you feel low scores are preventing a refinance. You'll find hints, tips, and more help for improving credit at Improve Your Credit Scores with Lasting Results.

Similar to your situation, you'll also want to read my response to Bobby in Somers, NY at 500k in Home Equity Yet Can't Refinance.

Best wishes, Kate

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You can also ask Kate about your mortgage at How to Improve Your Credit Rating with Amazing Success.

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