Covid forbearance ends soon and need a loan modification

Katneedsrefi

LoanSafe Member
I’m a hair stylist and was laid off for 9 weeks during my state’s shutdown in March 2020. I also lost significant income even when my salon opened as people were scared to come in. I got a forbearance for both my mortgage and home equity loan. The mortgage is federally backed so I was able to put missed payments on the back end of the loan. The home equity loan is not federally backed so not looking good for that even though a few customer service reps said I would be able to.

I was also told that even if the investor wouldn’t approve a deferral, they would probably do a modification to accomplish the same thing. What I’m wondering is, are mortgage servicers actually making this possible or should I expect the typical bull crap? I don’t want to have to do a repayment plan, I’m not sure I can afford it, but would work more hours if I had to. Even then, I’d have to make 2 payments this month to even qualify. I’m also reluctant to start the modification process now because I don’t want my forbearance to end any sooner than necessary. Right now it ends December 15. Should I fill everything out and just not send it until right before then? Any advice would be appreciated.
 
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Moe Bedard

Call 619-379-8999
Staff member
Loan Safe Mortgage
Welcome to the LoanSafe forum.

The loan modification process can often take several months to complete. They may make mistakes and or have missing paperwork which caused the timeline to sometimes go from 3-6 months just to get a modification so I would suggest you do your best to qualify now. Also, there is going to be a tsunami of homeowners seeking loan modification in the coming months and next year, which will further delay and complicate the process.

You just need to make sure that that the modification offered is something you can afford over the long-term and it is not just a temporary band-aid.
 

Vavouna1

LoanSafe Member
Hi Moe, I'm in the same boat kind of. My income was affected by COVID last year. I was on forbearance and that ended. I was offered a defferal plan, but heard about the new loss mitigation waterfall modification. Do you know anything about this? Thank you.
 

Katneedsrefi

LoanSafe Member
Welcome to the LoanSafe forum.

The loan modification process can often take several months to complete. They may make mistakes and or have missing paperwork which caused the timeline to sometimes go from 3-6 months just to get a modification so I would suggest you do your best to qualify now. Also, there is going to be a tsunami of homeowners seeking loan modification in the coming months and next year, which will further delay and complicate the process.

You just need to make sure that that the modification offered is something you can afford over the long-term and it is not just a temporary band-aid.
I have another question, do you know if loan servicers are using different criteria for qualifying for a modification due to Covid? My servicer at one point told me that it would be considered a disaster and therefore an easier process. But I think that was when they thought I had a federally backed loan. My loan is owned privately. I also think I’ve read that they won’t give you a modification unless you’re at least six months behind. Any advice would be appreciated.
 

Moe Bedard

Call 619-379-8999
Staff member
Loan Safe Mortgage
You are welcome!

All the COVID protections have ended. There is no hard and fast rule on how many months you have to be behind on your mortgage payments. Normally it is 90+ days for most mortgage servicers.

My experience over the years is

#1 - You have to have the ability to make your payments over the long term and prove it.

# 2 - Fill out your paperwork properly and get them EVERY document they need while you keep your own master file with copies and notes along with sending everything certified mail or fed ex.

#3 - Make sure that you stay on top of this but do not constantly contact them. Every 2 weeks is the norm.

#4 - Be polite and treat them nicely. You may win a friend that pushes it through for you.

#5 - Try to get an advocate to assist you by getting local help if your state or county offers it.

Good luck!
 

Moe Bedard

Call 619-379-8999
Staff member
Loan Safe Mortgage
Hi Moe, I'm in the same boat kind of. My income was affected by COVID last year. I was on forbearance and that ended. I was offered a defferal plan, but heard about the new loss mitigation waterfall modification. Do you know anything about this? Thank you.
Hey Vavoouna1!

The loan modification process is done to help you get affordable monthly payment terms via the Waterfall Method. When your lender reviews your application, they will use this method. First, you must have an income coming in to pay the loan payments long-term or you won't qualify for any type of loan modification.

When you submit your financial information – monthly income, monthly expenses, cash in the bank, etc., your lender will use this to reduce your mortgage rate in order to meet a new target an affordable mortgage payment that needs to fall at or below 31% of your reported gross monthly income and it includes principal, interest, taxes, insurance and any HOA dues.

Sometimes they will go as low as 2% interest rate and extend the loan up to 40 years.
 

Katneedsrefi

LoanSafe Member
You are welcome!

All the COVID protections have ended. There is no hard and fast rule on how many months you have to be behind on your mortgage payments. Normally it is 90+ days for most mortgage servicers.

My experience over the years is

#1 - You have to have the ability to make your payments over the long term and prove it.

# 2 - Fill out your paperwork properly and get them EVERY document they need while you keep your own master file with copies and notes along with sending everything certified mail or fed ex.

#3 - Make sure that you stay on top of this but do not constantly contact them. Every 2 weeks is the norm.

#4 - Be polite and treat them nicely. You may win a friend that pushes it through for you.

#5 - Try to get an advocate to assist you by getting local help if your state or county offers it.

Good luck!
Thanks again!
 

Katneedsrefi

LoanSafe Member
OK just one more question, I think! So I think I can do the repayment plan if I have to. I’m wondering if there is any penalty, i.e. them not letting me if I first try for the deferment and then if that doesn’t work the modification and if that doesn’t work tell them I will do the repayment plan. Know what I mean? I think they prefer if one does the repayment plan but that is not my favorite option so I’m kind of leaving that for last. But if they won’t let me do it if I try for these other options first then I’m just going to go ahead and ask for the repayment plan.
 

Moe Bedard

Call 619-379-8999
Staff member
Loan Safe Mortgage
You are welcome.

That is a good plan. There is no penalty per se, but they can decide however they choose even with the various guidelines in place. I would just make an excuse if you do go for the repayment plan like I came into extra money or I'm using money that I did not intend to that was set aside for something else.
 
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