From option ARM’s to loan modifications… what’s a struggling mortgage broker to do?

As lenders become more willing to work out loan modifications with sinking homeowners, will struggling mortgage brokers switch from originating loans to modifying the very loans they sold only a few years prior?

As the likelihood of a significant drop in long term rates is looking slim, many mortgage brokers are left wondering where the next paycheck is coming from.

I sense an oncoming surge in advertising for loan workouts and modifications.

Now don’t get me wrong, if the bank agrees to reduce the principal balance of a loan and/or drop the rate to accommodate a borrower’s budget it makes sense for the borrower. I can certainly see the utility in paying a professional for help in getting this done in many cases as well. 

The issue I can see coming is that many brokers will simply apply a short term band-aid by getting the banks to agree to a two to three year interest only rate reduction rather than negotiating a true solution by way of an affordable fixed rate that prevents the borrower from slipping back into default once the rate resets.

I’m thinking that before long you’ll be seeing those catchy but annoying dancing ads for something other than just a neg-am option ARM mortgage.