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
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.
Kate's Answer: My HAMP Payoff Quote Doesn't Show Mortgage Balloon Payment
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
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