The long road to a mortgage modification
I’ve asked my lender to modify the loan on my home because of a reduction in my wages. I owe more than the house is worth, so selling isn’t an option.
The first set of paperwork — income, pay stubs, expenses, etc. — that I sent was acknowledged for about six weeks, at which point it apparently disappeared into a netherworld. I resubmitted the paperwork and was placed on a three-month trial period. I was told that I would receive an envelope of paperwork after the first trial payment. It’s coming up on my sixth trial payment and I have yet to see the package my lender promised.
I’ve yet to miss a trial payment and have stayed up to date on all my other bills. About a month ago, I was told that my paperwork had been incorrectly recorded — my wages were recorded after taxes instead of before taxes and that would have been enough to make me qualify for the government program. The person on the other end of the phone promised to update my evaluator. My evaluator then claimed to have no record of that when I spoke with him directly today.
My credit was around 760 when all this begun. Last time I checked, it was at 620. It seems like my bank is trying to get the most out of me before they foreclose on me and they’re doing very little to help. I would rather keep my home, but at this point, a straight answer either way, regardless of the result, is a pretty attractive option.
Searching Internet forums, all I find is similar stories — and no successful ones. Do you have any suggestions that could help someone in my shoes get a straight answer?
Answer: I’m afraid I can’t offer much help, only some solace in the fact that you are far from alone. However, there is a way to get a good handle on what’s going on with your loan modification package, but you’ll have to align yourself with a housing counseling agency to do it.
In and of itself, that’s not a bad idea, for people who find themselves in your situation have a difficult time navigating the process on their own, as you have discovered the hard way. What’s more, these services are usually free.
But back to your question: Hope Now, an alliance between counselors, mortgage companies, investors and other mortgage market participants formed to help owners in distress, offers a web portal through which counselors in key markets can assist troubled borrowers in assembling all the documentation required for loan modifications under the federal Home Affordable Modification Program.
The portal, known as Hope Loan Port, also allows counselors to track the status of their clients’ loan modification applications and provide them with regular updates, which everyone concedes has been a source of frustration to many borrowers. But then, I don’t have to tell you that, do I?
In the meantime, keep track of every bit of correspondence and phone calls (or phone tag) you make to your loan service. Write down the time and date and the name of person with whom you spoke or left a message, their title and identifying number, and your recollection of what was said.
Question: I owe $312,000 on my house in Arizona, which is worth around $215,000. I have been solicited by [a couple of companies] to have my mortgage sold and repurchased at present market value. The program pools together qualified mortgages which are bought from the institutions at market value. A new mortgage is then written for this reduced amount, albeit at premium rate of prime plus 3%. Upfront fees are $3,500, of which $2,500 is refundable if they can’t work the deal with the banks.
I’m skeptical, of course, but they so far appear to at least be transparent in their dealings; working phone numbers, websites, Better Business Bureau listing, etc. Have you encountered any of these arrangements that actually work? I’ve run the numbers and it appears this would save significantly, even with the upfront fees and higher rate. —L.H.
Answer: I have nosed around and can’t find anything either positive or negative about the companies you mention. But beware of upfront fees. If that’s what they want, run, don’t walk, to the nearest exit.
The No. 1 rule set out by consumer protection experts is don’t give anyone any money in advance, even if they promise a sizable refund. If they turn out to be the least bit sleazy, good luck with that!
According to the Federal Trade Commission, it’s a big, bold red flag that something is amiss when you are required to pay something before you actually receive the services promised. Even though these firms don’t actually guarantee they’ll be successful — which would be another signal of a scam if they did make such promises — the FTC says that unless it is an attorney who you’ve checked out thoroughly, keep your hand on your wallet and your wallet in your pocket.
“We can only extract the differences between comparables when the data is in the multiple listing service,” Richard Kendrick of Appraisal Services in Fayetteville, Ark., writes in response to my answer regarding valuing energy efficient homes ( Realty Q&A, April 29, 2011 ). “Realtors need to provide factual information such as geothermal, cellulose insulation, energy efficient windows, solar or solar passive homes. If they don’t report the information, then we cannot find the homes that have the differences.”
Nationally syndicated columnist Lew Sichelman has been covering the housing market for more than 40 years. MarketWatch readers are encouraged to send their real estate questions to him at email@example.com . Answers will be presented in this column every Friday. However, because of the volume of e-mail he receives, he cannot answer every reader’s query.
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