Good Morning Piggy’s,
NPR had Matt Battiata on it talking about the market and things like loan mods. Give it a listen. By the way, he is wrong on a lot of what he said, especially about having to full doc the mods. http://www.kpbs.org/radio/these_days;id=13674
On another note, I thought I would give any of you who have come upon hard times due to this tough economy a road map to working with your bank on a loan mod.
Now I am not admitting to first hand knowledge, but lets just say that this is solid hypothetical advice.
Steps.
1. After legitimately falling on hard times, contact the hope for homeowners program. (Link) http://portal.hud.gov/portal/page?_pageid=73,7601299&_dad=portal&_schema=PORTAL
When you contact them, they are going to ask you to fill out a budget worksheet over the phone. Make sure that you have a good budget of your own ready. You probably won’t speak to a person right away. You most likely will have to set up a call back within a week or so. Make sure you take the call, or you will be bumped to the back of the line.
2. Your budget. Your budget will have to show that you are able to make some form of legitimate payment. If you are completely broke and have no income potential, then you are out of luck. I think a good standard to show in your budget is that you can pay between 70-80% of your original loan amount with taxes included. Once again, just be honest with the real facts, but this should help you with planning a budget that they will accept.
3. They are going to ask you to explain why you have lost the money and if it will be replaced anytime soon. Your answer to this will effect the terms you are offered by the bank in the end. My hypothetical knowledge says that the best answer is that you are not sure, and that the income is tied to the general economy and that you have a 5 year time frame for that to happen. (Once again, be honest with this.)
4.Once this info is gathered, they will send it on to your banks remittance department. Then they will send you a copy of what they sent to the bank on your behalf with the budget work sheet. Don’t call the bank/lender directly!!!!!!!!! This will get you nowhere (Usually). You will probably get better terms with Hope for homeowners.
4b. It works best if you have not missed a payment yet. The banks like working with people who are still paying.
5. The bank is supposed to contact you within 3 weeks. They won’t. On the day the 3 weeks ends, call them. They will tell you that you cannot speak to your rep (ever), but that you can leave a message with them to give to your rep. Then your rep will leave a message for you and so on, so you are always talking to a intermediary. Totally frustrating. At this point get the name and info of who you are speaking to and make sure that they have documented the call. Let them know that you have done the same.(Also, never get frustrated or angry. This will not work. The best approach is the worried home owner who is concerned about losing their home and really wants to work this out.
5b. My info comes from a hypothetical person with a high credit score who let the bank know that they wanted to keep that in tact. I think this might have played a part in the mod, but I am not sure.
6. If they have not made an offer by the 3rd call, miss your next payment. Once again, only if you can’t pay it. Don’t keep paying it until you are broke. If you see that within a month or two you won’t be able to pay, just stop then. Otherwise you will be in a world of hurt.
7. The next time you call, let the intermediary know that you missed your payment, and that you are planning on missing the next. Be succinct direct and courteous. This is a business deal, not a soap opera.
8. Know that the person on the phone has the ability to modify your loan, even though they say that they are only the messenger.
9. My hypothetical source found that on that 4th call where they were going to miss the 2nd payment, the intermediary found the file sent by Hope for Homeowners, asked a few questions as to why they were having hard times and then put them on hold for 5 min. The person came back with an immediate offer to lower the current loan of 6% for 40 years to 4% for the next 5 years, and then an adjustment back to the original 6% after the 5 years were complete.
They asked for $100 to redo the loan,and said the borrower would not have to pay the loan for 4 months as they did the refi. This 3 months of no payment was tacked on to the principal. Know that they probably won’t lower your principal. Be happy with the 5 years of reduced payments.
10. The lender was also willing to restore the credit rating after the process was done, so the person was able to keep their rating. In this hypothetical situation, the loan was a 0 down 100% loan with no pmi.
11. The positive was that this hypothetical person was able to restore their income after the mod and is now able to buy more property when the market bottoms.
12. Oddly, the hypothetical bank never asked the person to prove that they had actually lost any income. They just seemed overwhelmed and wanted to move on right away.
Anyway, just wanted to help any of you who might be legitimately struggling. Not sure that this will work for you, but I can (Hypothetically vouch for it)
MPO
P.S. Feel free to share your stories of real successful mods for the benefit of helping others and restoring this great nation back to its financial prosperity!
