Ditto what SDR said. You are not likely to get a loan mod at this time without full documentation, so it will be difficult if not impossible to truly “fake out” the servicer/lender.

That being said, it is conceivable that we may see some changes in the future mod protocol if enough borrowers with ability decide to play chicken with their servicer/lender. As an example, consider a borrower who financed 100% of his $800K home, the home comps at $560K, and he has the ability to continue servicing his $800K mortgage. The borrower gives the servicer/lender an option – either lock me into a low fixed rate and/or write down my loan balance to the comp level, or I will go into default. What will the servicer/lender do if this type of proposition becomes commonplace? I submit that it very well may be in the financial interest of the lender to capitulate as opposed to taking on an REO.

Regarding 80/20 deals, there has already been cyber-chatter regarding those with ability to pay playing chicken with the piggyback lender by simply stopping payments and forcing the lender to react. If the piggyback lender has essentially an unsecured loan due to reduction of home value, why would they foreclose? The implication is that the lender will accept pennies on the dollar in a short-pay deal just to get something. Again, the pre-requisite is that the borrower is geared-up for a game of chicken, is prepared to go into default, and is even prepared to go into default on their first mortgage to create the threat of a complete wipe-out of the piggyback loan.

In the first example above, it will certainly require financial disclosures as the lender needs to confirm ability to pay. In the 80/20 situation, there is arguably no need for financial disclosure, much as the lender would like it, because the proposition is take it or leave it regardless of ability.

I expect many future examples regarding the intracacies of negotiations with servicers/lenders in this regard. We are already seeing templates for how to address particular situations and more of the same to come.