Loan Modification Process - Uncharted Waters

mudhen5

LoanSafe Member
Nov 6, 2019
3
1
1
Question for the board as the loan modification process is completely new to me. I'd like to educate myself and the options available before I talk to them further.

My current situation is this..... We have bought a new home and moved to another state. I was able to work remotely while my wife was going to transfer to another office out here. My employer cut down my hours drastically and my wife's move into the new office had been delayed quite a bit (4 months) so needless to say that got us into a bind quick. I am currently looking for a job while my wife has just started this Monday finally.

I'm unsure what qualifications are needed to be approved for loan modification, but can't assume my chances are good considering I am not working and pursuing employment currently. I am behind a good amount and can look to borrow this money from family to get caught up. Unless somehow it can be modified and I can just resume the payments when given the lump sum from a family member. My payments do not need to be cheaper I simply just need to the time to right the ship even if it is on borrowed funds (enough to get caught up and then some)

What are my options at this stage? I don't want to be denied loan modification or go through any short sale process as I would like to keep the house and resume my payments.

Thank you in advance.
 

just_me

LoanSafe Member
Sep 14, 2015
515
38
28
Hopefully you can resolve this by month 6. At that point, the Lender will foreclose promptly. If family funds you during this time, it's helpful to have the credit while looking for new employment. Unlikely you will be considered for modification as it is no longer required. You may have a little reprieve if your loan is FHA. Work on getting re-employed and paying. (if payments are returned, save them for negotiation.) Then you can afford forbearance on past due amounts. (which is the time to ask family for help) Other than that, watch your mail for legal notices and plan on answering the complaint when it comes.
 

mudhen5

LoanSafe Member
Nov 6, 2019
3
1
1
Hopefully you can resolve this by month 6. At that point, the Lender will foreclose promptly. If family funds you during this time, it's helpful to have the credit while looking for new employment. Unlikely you will be considered for modification as it is no longer required. You may have a little reprieve if your loan is FHA. Work on getting re-employed and paying. (if payments are returned, save them for negotiation.) Then you can afford forbearance on past due amounts. (which is the time to ask family for help) Other than that, watch your mail for legal notices and plan on answering the complaint when it comes.
Thank you for your reply appreciate the info. I am on a conventional 30 year which I believe is a non FHA. I'll have to look over the paperwork. If by some chance it is FHA what do you mean by a reprieve? I'm not familiar with their flexibility. Thanks again
 

isisis

LoanSafe Member
Jun 22, 2010
1,667
209
63
North bay
Servicers were never required to modify but HAMP supplied some incentive. Now that's it's gone there are still rights under RESPA regarding loss mitigation.

By the time a mortgage payment is 45 days’ delinquent, the servicer must appoint personnel to help the borrower with loss mitigation. (Servicers also have to inform borrowers about available loss mitigation options in writing and over the phone, if possible and appropriate.)

Specifically, the servicer must assign a single person or a team that’s accessible to the borrower by phone, who can respond to inquiries and work with the borrower through the loss mitigation process. The appointed personnel must be able to advise the borrower about:
  • available loss mitigation programs
  • how to submit a complete loss mitigation application
  • the status of a submitted loss mitigation application
  • how to make an appeal (if the application is denied), and
  • the circumstances when the servicer may refer the account to foreclosure.
Here's a link if you want to read the law itself. https://www.law.cornell.edu/cfr/text/12/1024.41

That being said as we've all found out banks don't tend to be very law abiding so who knows if they'll be helpful. Even so there are various ways of trying to stand up for your rights if they aren't. Most just succeed in buying you time but it sounds like time is what you need so hang in there.

Let us know how it goes and if you need ideas for slowing down the process.
 
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mudhen5

LoanSafe Member
Nov 6, 2019
3
1
1
Servicers were never required to modify but HAMP supplied some incentive. Now that's it's gone there are still rights under RESPA regarding loss mitigation.

By the time a mortgage payment is 45 days’ delinquent, the servicer must appoint personnel to help the borrower with loss mitigation. (Servicers also have to inform borrowers about available loss mitigation options in writing and over the phone, if possible and appropriate.)

Specifically, the servicer must assign a single person or a team that’s accessible to the borrower by phone, who can respond to inquiries and work with the borrower through the loss mitigation process. The appointed personnel must be able to advise the borrower about:
  • available loss mitigation programs
  • how to submit a complete loss mitigation application
  • the status of a submitted loss mitigation application
  • how to make an appeal (if the application is denied), and
  • the circumstances when the servicer may refer the account to foreclosure.
Here's a link if you want to read the law itself. https://www.law.cornell.edu/cfr/text/12/1024.41

That being said as we've all found out banks don't tend to be very law abiding so who knows if they'll be helpful. Even so there are various ways of trying to stand up for your rights if they aren't. Most just succeed in buying you time but it sounds like time is what you need so hang in there.

Let us know how it goes and if you need ideas for slowing down the process.
Thank you for the source of information, very informative. I should be acquiring the chunk of funds I need to get caught up but will not happen till the later part of this month (December). The loan company is trying to gather W2's, income tax returns, paystubs, etc. I am pretty sure at this point I would not qualify for modification at this juncture. What do you suggest as ideas to slow down the process? I am on my 6th month now. Thank you
 
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isisis

LoanSafe Member
Jun 22, 2010
1,667
209
63
North bay
In many ways the various tricks to slow them down depend on your position. It also might be a matter of timing because at the same time some of the things you can do might annoy them so if you're in a position that requires being in their goods graces you might not want to use these methods until you need them.

That's kind of where I am right now I've got a scheduled sale coming up but at the same time they are saying they're going to offer me a new settlement modification. I'm in litigation, BTW.

If their proffered modification doesn't materialize I'm going to have to make them rather angry by becoming very vocal and demanding. Basically you can file compliants with various regulatory and consumer agencies. These include:

The CFPB
The OCC
The FTC
The FDIC
Your state's Attorney General
Your state representative
State consumer and regulatory agencies
The BBB

All of these can be done on line. To be effective you need to be able to write professionally and authoritatively (or as least fake it) and ideally cite the corresponding law. Except in the case of the BBB because they're not a government agency.

Some of those companies - particularly the CFPB - will then contact your servicer who will then provide a response. Servicers don't like this much. Mine in fact demanded I take the complaint down from the CFPB website.

But the overall effect it had is to use caution in dealing with you. Most people don't stand up for their rights. Those of us who do make them a little leery and therefore slightly less willing to mess with us.

Other things you can do are send a QWR regarding the servicing of your loan. You point out problems or inaccuracies and they have to response within a given time frame.

Depending on your situation you could also send a validation of debt letter. This is very effective at slowing things down.

If you have questions about any one of these let me know.