Below is a Bank of America loan modification that De Novo Law Firm obtained for client M.L. with a home in Perris, California.
Before Bank of America Modification:
Monthly Mortgage Payment: Interest Only Payment of $1,622.54 (including taxes and insurance)
Interest Rate: 6.4%
Monthly Mortgage Payment: Principal, Interest, Taxes, and Insurance Payment of $878.57 (payment capped at $1,048.03 at year 6)
Interest Rate: 2.15% capping at 4.5% after 6 years
Monthly Savings: $743.97
The monthly savings figure is a bit deceptive. While the payment for M.L. decreases by that amount, you should also keep in mind that the new payment is a principal and interest payment and the old payment was an interest-only payment. So the actual monthly savings are much higher once you consider the principal reduction taking place with each payment. Like most modifications, this modification has a step-rate feature where the interest rate rises every few years until it caps at a market rate. The capped rate of 4.5% over the balance of the loan is very competitive with today’s rates and is historically low. If Client M.L. were to rent in her area, a comparable rental would cost over $1,000/mo.