If you are attempting a loan modification, you are likely frustated
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You are not alone if you’re frustrated in doing a loan modification. Thousands who want to stay in their home are hoping a loan modification will help. The Federal Housing Finance Agency says that as of November 30, 2009, a total of  405,700 trial and permanent modifications had been accomplished using the government’s Home Affordable Modification Program called HAMP. The largest part of that number are actually trials and not permanent modifications. Attempting a loan modification is like running a marathon without a map of the race course, the largest hurdle being the incompetency of the lenders, with some banks much worse than others, but ALL needing some improvement.

The mounds of paperwork the homeowner needs to submit to their lender is the same as what they would have to submit for a short sale.  On a short sale, however, the homeowner has the aid of a Realtor, an attorney, or a loss mitigation company working for them by gathering the required papers, organizing the application, and submitting it for them.   On the loan modification, they’re on their own unless they want to pay a fee for an attorney or loan modification company to do it for them.   Then they have to beware of companies who seem reputable and claim to want to help, but  give poor service and very little results for the money they require upfront. Some of these companies actually take the money and do nothing, preying on the fear of the scared homeowner.

We’ve talked to many homeowners who have submitted their lender’s required documentation, then received a call from their lender saying they are in default because they have not received anything from the homeowner.  Many times the homeowner receives an identical loan modification package requesting the same information they just sent their lender.  When they call their lender, they’re shifted from one person to another, none of which know their keyboard from a coaster.  One lender said, “The reason the information is not in our database, is that it was entered into Vault A.”  When asked what Vault A was, the processor had no answer to that.

Another homeowner, after making 6 required trial payments on time, received a daily call Christmas week including Saturday and the week thereafter, to tell her that her file was complete and perfect.  Each call was from a person whose dialect was difficult to understand , and when the homeowner asked the purpose of the call, she was told that the computer picked out homeowners at random and her name came up.  Calling every day for two weeks with the exception of Christmas and New Year’s Day didn’t seem like random calls.   The caller could not answer questions about the loan modification, as it was not in their computer for them to view and none of the callers had any idea of when, or if the loan modification was with a negotiator or person in a decision-making capacity. What was the purpose of all these calls? None of them accomplished anything and left the homeowner more confused than she already had been

Most homeowners attempting a loan modification feel as if they are in limbo, or some sort of bureaucratic purgatory.  To add insult to injury, their trial payments go into a special account and they are reported to the credit agencies as being late.  Very few of the people I have talked to were ever told  their credit was being damaged by the process.  Some homeowners have even reported that their lender failed to pay the homeowners insurance with the monies in already in escrow accounts, because the insurance renewal came up during the trial period.

There are some satisfied homeowners who have been successful in obtaining a loan modification but, in general, the system is broke. The government has been focused on health care (we won’t go there), and although we don’t want over-regulation of the lenders, there needs to be a better way.  There are some smart minds out there, but who’s out there to listen and put those solutions into place for the homeowner in danger of being pushed into a short sale, or if that should fail, a foreclosure, deed in lieu, or even a bankruptcy?

 

 

 

 

 

 

 

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Filed under: Avoiding Foreclosure • For Sellers • Home • Loan modifications • Real Estate

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