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For guidance on calculating your modified mortgage payment, go to Calculate Your Mortgage.,
Do not depend on, or sign contracts with, 3rd parties to request a loan modification or sell your house! This is a leading cause of foreclosure! Stay in control of your own case!
Read lessons about 2 types of modification, sale of property (under the mortgage balance), modification Frequently Asked Questions (F.A.Q.'s) and short sale F.A.Q.'s.
Loan modifications – Know your loan type and prepare your numbers FIRST before speaking with your Servicer! The numbers are the key. There are 2 modification methods and calculations! If your numbers do not fit HAMP (Making Home Afffordable), prepare for a Traditional in-house modification. That is done a lot more than HAMP! And make sure to ask for Traditional because the Servicer front-line reps are trained for HAMP. Be persistant! Traditional is based on NET income and includes household expenses such as food and utilities. HAMP is based on GROSS income and only takes into consideration revolving monthly debt.
Know what is on your credit report as revolving debt. Minimum payments on loans and credit cards are included when Servicers evaluate cases.
Errors with servicers have been found with the input of numbers on loan modification requests. Check your numbers every time you call to check status. Follow up using the scripts on the website. They are carefully worded!
If you are denied a modification, ask WHY. This is your right. Many times this will give you information as to how you can try again or correct what was previously presented wrong.
Partial payments and trial payments are being reported as LATE. Beware! There is no known regulation about this. Insist that the Servicer override the negative reporting with CURRENT as negative reporting is causing other credit lines (credit card companies) to automatically reduce Borrower credit limits or terminate credit altogether. This has been devastating to borrowers who operate business with credit.
Short sales – You CAN sell under the mortgage balance! Also, do not ever sign your deed to someone else so that they sell your house! You hear the term “walk away” – no! You can sell your house with a licensed Realtor when the house value is under the mortgage balance! Learn the steps on the site! Answers to tax questions are under Short Sale F.A.Q.'s.
Principal balance reductions: Always ask for a permanent reduction in the principal balance (not a deferred amount) but know the reality. The Obama administration and U.S. Treasury will give incentives to encourage principal balance reductions. Caution: be aware that reductions are most likely to occur on loans that are actually owned by the institution, i.e. applicable for Bank of America-owned loans (not Bank of America "serviced" loans). A good example would be Wells Fargo Equity loans (they own these) and consequently they can make the decision on their own loans. This reduction will likely apply on a small percentage of loans, because it is at the discretion of the owner, but ask.
If you have a foreclosure date in the system and you have a complete loan modification or short sale package in, call at least 3 days prior to the foreclosure date and make sure they move the date forward to give them time to process your case. Once you get verification they have removed the date or moved it, then call the Attorney to make sure it is off their books. This is a critical step!
If you have a foreclosure date, and you were denied a loan modification, you have several choices to stop the foreclosure (Most of the time we have seen denials caused because people did not present their numbers right). So now what do you do to give yourself time to regroup? 1) tell the Servicer you have decided to sell the property and ask if they will give you some time to list and sell it, 2) sell the property quickly and send a purchase agreement and all required paperwork in to the servicer (this normally stops the foreclosure). The sale does not have to be completed. 3) ask for a partial payment forebearance which gives the Borrower a temporary arrangement where they may pay a partial mortgage payment for 3-6 months, 4) ask for a repayment plan which requires the borrower to pay the regular mortgage payment plus part of the amount in default (this is not a modification), You may be able to do this for a month while you are posturing your numbers to meet modification guidelines. 5) file bankruptcy 6) have a mortgage audit performed (lesson being prepared on website) and file for relief in court stating mortgage violations or foreclosure violations (unfair treatment).
Most servicers postpone foreclosures when all paperwork is in. Others, such as Ocwen, have a policy (in the case of short sales only), for example, that does not allow foreclosure postponement so have a Plan B in mind.
If a Servicer says you are foreclosure, do not panic. You may not be. Learn the difference between collection threats and foreclosure procedures. These are listed on the site. Ask if you have a foreclosure date in the system.
Can you apply for a modification or sell a property if you have a foreclosure date? YES!
If you are in a loop with the Servicer and not getting consistent answers, call the CEO area of the servicer. Look it up on the internet. Google the company CEO or headquarters and call that number. Often the escalation coming from the CEO area will cause the servicer to prioritize your case.
Prevent foreclosure, don’t just give up, because foreclosure on one’s record can cause job termination, or hinder one’s ability to get another job or alternative housing.
Bankruptcy is not as bad as foreclosure but know why and when to use it. It can be used to restructure or wipe out debt. It can also be used to stall foreclosure but exhaust all other means to stop foreclosure first because the servicer will come back for the house in 30-60 days if the mortgage payment is not made.
Sometimes it is better to do the modification or sell property first before filing bankruptcy because bankruptcy can hinder the progress.
Yes, you CAN work with a servicer to obtain a loan modification or to sell property while you are under bankruptcy if you 1) get a consent form signed by your attorney, and 2) if the servicer, trustee, and judge approve the modification or sale of property.
Underwater borrowers: we need the help of researchers and litigators/judges to develop a plan to teach borrowers step-by-step instructions how to use mediation or litigation (either pursuing a suit oneself or with an assisting attorney or mitigator) to encourage mortgage servicers to comply with federal, state, and county laws regarding procedures and fair treatment. This lesson will teach how to apply violations in mortgage loans, pre-foreclosure practice, reporting, notification (disclosure), etc. to file complaints to gain fair results. Possible outcomes may include principal balance reduction, monetary damages due to negative credit reporting during the modification process, completed short sales with reduced or forgiven deficiencies, immediate loan modifications, monetary damages for emotional distress. If you or anyone you know can help Operation Restoration, please click here for Tools with Teeth.