Generally, when you get a loan modification, in particular FHA loans, they will wrap up all the back payments, the late payments, etc., either into the new loan or they’ll put it in the backend in some kind of loan that’s either got to get paid off 30 years down the road or at some point, when the house is sold. Generally, when they modify the loan, the idea is to get you into a payment that you can afford given your current situation.

It all depends on the individual bank, as the banks can adjust the terms of the loan mod as this is the same as standard loan modification, they can do different things. Generally, they wrap up all the back payments, put them on the end of the loan. Some lenders will forgive parts or all of the bad payments if you own the house for long enough. In some cases of loan modifications, if you sell the house for your profit, within 2 years, you have to pay back 50 percent of the back payment or 4 years, it’s 25 percent or something similar, they call it equity sharing program.

If the house goes up in value, you agree to pay back some of the back payments that were put on the backend of the loan but every situation is pretty unique. There is no standard loan modification but generally, the idea is to at least get you the payment where you can afford the monthly payments.

Attorney James Logan has also seen loan modifications where you can afford the monthly payment but they put so much on the backend of the loan that essentially you’re renting the house. In one case, you’re putting about $120,000 on back payments on the house and the house is only worth $230,000, so the house might have to go up to well over $300,000 of value before the guy can ever sell it and not owe all the money. In that case, you’re basically just renting the house because you’re never going to owe it. But as long as you stand there, it’s worth fighting, you just want to be able to make payments.