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Loan in Default |
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I have been in default with my current lender, we are in process of a loan modification. I recently received the new loan papers from them and the more I ask them questions the more confused I get. My question is simple, if I originally borrowed 238,000 on the loan, and in default for the balance due, why are they taking all the arrears which amount to $63,000 and adding them to the loan? I understand late fees and other fees that have incurred due to the default, which should be added in to the new loan, but why am I paying $63,000 plus what I still owe on my loan? I tried to explain it to them my confusion, but they return their answers and confuse me more. Like borrowing $5.00 and paying back a $1.00 a week and if you are late I charge you .50 cents. So if you are 2 weeks late, that would be $6.00 you owe me, my lender says I would then owe them $8.00. Hope you can answer this for me so I understand, If they are wrong I want them to fix it. |
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I haven't seen all the papers, but if you are $63,000 in arrears, that's money you owe them, mostly for unpaid interest on what you borrowed. You owe it to them, so they're combining it with what you still owe on the original loan.
In your example -- if you are two weeks late, you now owe
the original $5,
the $1 you didn't pay the first week,
the $1 you didn't pay the second week,
the 50cents late fee for the first week, and
the 50 cents late fee for the second week.
That adds up to $8.
Hope this helps you understand it. You're lucky they're offering something that will allow you to keep your house, so if you can make the payments now, go for it. |
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Edith
Originally published on August 20, 2008 |
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