[quote=sdrealtor]I saw the loan mod papers as he asked my opinion before signing them. he absolutely can make it and will stay there forever. He has a tenant and his PITI net of the rent he recieves is about $1000. He is divorced and took out equity to buy the house. He was unemployed for a while. He went back and retrained in another industry and now has a very good job in stable field. He has been promoted twice in the last year since he started.

He had about 80K loan balance plus a year of missed payments forgiven and now owes about 450K which is about what its worth now. He absolutely will acquire equity and no repayment of the forgiven amounts will ever be required. I know this because I saw the loan mod papers. The 4.5% cap is for the duration of the loan also…[/quote]

I think it is wonderful your friend received a 4.5% (fixed?) interest rate for the remainder of his mtg. Even though I don’t personally believe interest rates will skyrocket in the next few years, I, too, have seen a few “proposed-mod agreements” and your friend’s arrangement is unusual since the consensus of “economist-types” seems to be that mtg rates will rise.

However a question looms in my mind on your friends situation: Why didn’t your friend and his ex SELL their property (at the time of dissolution) and split the proceeds amongst themselves so your friend would not be left holding the bag on a property that perhaps TWO INCOMES were helping to pay the bills while he was married? That’s usually what divorcing couples do in CA.

It appears the lender in question here “subsidized” your friend’s divorce settlement. Out of curiosity, one wonders why they would do that. If he was a year behind in payments, they could just foreclose on the property.

I understand the part about your friend needing to relocate (and rent the place out) in order to accept a position in his “new” field.