Understanding Obama’s Making Home Affordable MODIFICATION plan

Yesterday, the Treasury Department released some of the detailed guidelines for the “Homeowner Affordability and Stability Plan.” The plan includes $75 billion in incentives for lenders to modify the loans of struggling homeowners which will run through December 31, 2012. These incentives are under the “Making Home Affordable Modification” program.

[Update April 28, 2009: The inclusion of second mortgage loan modification within the MHA modification plan has been added]

MAKING HOME AFFORDABLE MODIFICATION

The “Making Home Affordable Modification” is not mandatory for all investors and mortgage services/lenders; however, it will serve homeowners as an incentive for loan servicers/lenders to generate loan modifications. Nevertheless, financial institutions that accept future “bail out” funding from the Treasury’s Financial Stability Program must participate in the “Making Home Affordable” (MHA) program.

Servicers who decide to participate will sign a contract with Treasury’s financial agent before December 31, 2009 (the contracts will not be available until April 2009). A list of participating servicers will be available at FinancialStability.gov after they have signed the contract with the Treasury Department.

According to the contract, servicers will agree to review every potentially eligible borrower who calls or writes asking to be considered for the program. Lenders will have to first reduce monthly payments so that the borrower’s payment is no greater than 38 DTI (DTI explanation provided below). Following, the program will provide subsidy to further reduction in monthly payments from 38 percent down to 31 percent DTI for the borrower (DTI explanation provided below).

However, loan modification will not be done if there is fraud involved or the modification is prohibited by the originally pooling and servicing agreement that dictate the servicing of the loan.

ELIGIBILITY

The government has a “self-assessment tool” provided on the MakingHomeAffordable.gov website where homeowners can see if they can benefit from either the refinance or loan modification programs. Additionally, it has a “Q &A section for homeowners” detailing the MHA Modification program as well as the MHA Refinance program.

The eligibility qualification process will be used, by using the net present value (NPV) test set forth by the Treasury, to determine if the modification (including the incentive payments – see below) provides the investors with a better financial outcome (cash flow) than foreclosure.

To be eligible for the modification, the borrower must meet the minimum eligibility criteria for this plan as follows:

Verified owner occupied properties (Single-family home up to a four-unit property, condominium, cooperative – real property under state law).
The home may not be vacant or condemned.
Loans must have been originated before January 1st, 2009.
There is NO minimum or maximum Loan-to-Value (LTV) ratio for eligibility purposes.
The unpaid loan balance must be equal or less than $729,750 (1-unit), $934,200 (2-units), $1,129,250 (3-units), $1,403,400 (4-units).
Mortgage payments that amount to more than 31 percent (front-end DTI) of the borrower’s gross monthly income (before taxes).
Borrower must have experienced a significant change in income or expenses, to the point that the current mortgage payment is not longer affordable.
Borrowers need NOT to be delinquent to qualify. However, delinquent borrowers are encouraged to seek the advice of a HUD-approved housing counselor.
Borrowers in bankruptcy are not automatically eliminated from consideration for a modification.
Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
The loan modification will only be allowed once under the MHA program.

If you need help evaluating income and expenses, contact a HUD-approved housing counseling agency. Counselors will help the borrower determine how much of an interest rate reduction is required to get the borrower’s mortgage payment within the 31 percent DTI guideline with a rate floor of 2 percent.

[Note:] The front-end DTI calculation includes principal, interest, property taxes, insurance and HOA fees – Junior liens are not included. Use the following calculation:
{Gross income x 0.31 = front-end debt payments}

As one of the conditions of the modification, borrowers with back-end DTI ratios that exceed 55 percent of their gross monthly income must certify that they will meet with a HUD-approved housing counselor or a National Foreclosure Mitigation Counseling Program (NFMC) to help them create a sustainable financial plan.

[Note:] The back-end DTI calculation includes principal, interest, property taxes, insurance, HOA fees, mortgage insurance premiums (MIP), junior lien payments, mortgage payments on second homes, payments to other debts, aggregate negative net rental income from all invested properties owned. Use the following calculation:
{Gross income x 0.55 = back-end debt payments}

REQUIREMENTS

Borrowers will be required to provide documentation in order to qualify for the MHA Modification program. Some of the required documents are:

Monthly gross income (before tax) documentation from the wage earners on the note. This includes most recent pay-stubs covering at least one-month and/or documentation of income received from other sources.
Most recent income tax returns. Additionally, borrower’s income will be verified by requiring a signed Form 4506-T (IRS Form).
Assets information.
Second mortgage information (e.g.: most recent mortgage statement information) on the property.
Account balances due on all credit cards and the minimum payments due (i.e.: most recent credit card statement information).
Account balances due on all other debts (e.g.: student loans, car loans, etc).
Debts will be verified against the borrower’s credit report; however, the servicer will bear the cost to obtain the borrower’s credit report.
An “affidavit of financial hardship” (e.g.: a hardship letter) describing the circumstances that caused the income to be reduced or expenses to be increased (e.g.: job loss, divorce, illness, etc).

After gathering all this information, borrowers should call a HUD-approved counseling agency and their own mortgage servicer/lender. When contacting their lender, borrowers should ask to be considered for loan modification under the “Making Home Affordable” program.

THE MODIFICATION

After DTI calculations, borrowers could expect to receive below market rates as low as 2 percent. The rate will be fixed for a minimum of five years. After five years the rate may increase no more than 1 percentage point each year until the note rate reaches the Freddie Mac Primary Mortgage Market Survey rate in place at the time of the modification.

In some cases, however, the calculation for the new rate may reach as low as 2 percent and the DTI may still be above 31 percent. For these cases, the lender will extend the amortization period and the maturity date up to 40 years. If the DTI still exceeds 31 percent, the lender must defer the principal. The deferred principal will be owed when the loan is paid off, refinanced or the house is sold; meanwhile, it will not accrue interest.

FEES AND CHARGES

There are NO modification fees or charges that the borrowers will have to sustain. The modification fees and charges to the servicer (e.g.: cost of obtaining the borrower’s credit report, etc) will be reimbursed by the investor.

Unpaid late fees will be waived for the borrower. These include late fees prior to the start of the Trial Period and accrued during the period.

The investor may NOT require the borrower to contribute cash.

PRINCIPAL REDUCTIONS

There is no requirement for the servicer to use principal reduction under the “Making Home Affordable Modification” program; however, they may forgive principal to achieve the front-end DTI target. If the principal is forgiven, the rest of the modification process will continue per guidelines.

All is at the lender’s option to help the borrowers who fall under the 31 percent DTI requirement. However, by helping borrowers qualify, the program will reimburse mortgage services/lenders for a portion of the cost of a principal reduction.

THE INCENTIVES

To protect taxpayers, the MHA program will focus on sound modifications by providing a 90-day trial modification period. At the end of the period, the servicers will execute a modification agreement that includes escrows for taxes and insurance. Therefore, the modification will become effective the first calendar month following the successful completion of the 90-day trial period. A successful completion is defined as the borrower’s timely payments on the modified loan.

In the same protecting manner, only after a successful completion of the 90-day trial period for the modification, borrowers, investors, and servicers will be eligible to receive financial incentives. Therefore, no incentive payments will be made during and until the trial period has been completed successfully by the borrower.

The incentives under the “Making Home Affordable Modification” program include:

Borrowers who make timely payments on modified loans will receive a principal reduction which could equal to $1,000 each year for up to five years. The payment will be made directly to the servicer and applied directly and entirely to reduce the principal balance. The total incentive could equal up to $5,000 over five years and the borrower will receive information on a monthly basis regarding the accrual of these payments.
Servicers will receive a one time, up-front incentive fee of $1,000 for each modification of a delinquent loan and $1,500 for each modification of a current loan. An additional incentive of $1,000 per year could be earned by the servicer if the borrower remains current (less than 30 days delinquent) for 3 years. Additionally they will be eligible to receive compensation when they contact a junior lien holder and extinguish those loans.
Investors will receive a subsidy for a portion of the cost to reduce the interest rate for the modification and a one time incentive payment of $1,500 for each modification of current loans. Additionally, they are also eligible to receive compensating payments for increased risk exposure if the prices of homes with modified loans decrease in the five year period following the modification.

Similar incentives will be paid for “Hope for Homeowner” refinances.

INCENTIVES FOR SHORT SALES AND DEED-IN-LIEU

Servicers and borrowers will be compensated in order to facilitate short sales and deeds-in-lieu if the borrower either fails to qualify the NPV test or fails to qualify for, or default under, the “Making Home Affordable Modification” program.

COMMITMENT TO DELAY FORECLOSURE

As stated at the beginning of this post, the guidelines were released yesterday and the contracts servicers are required to enter into with Treasury’s agents will not be available until April 2009; therefore, callers will need to be a little patient. However, the Treasury Department has encouraged servicers/lenders to immediately assist delinquent borrowers at the greatest risk of foreclosure.

Consequently, participating mortgage servicers/lenders have made a commitment to delay foreclosure on loans that meet the minimum eligibility criteria for the “Home Affordable Modification” program.

WARNINGS

Additionally, some of the warnings made by the Government to homeowners are:

There is never a fee to get assistance or information about the “Making Home Affordable Refinance and Modification” programs from their lender.
Never pay a person or organization that asks for a fee in exchange for housing counseling services or modification of a delinquent loan.
Do not sign over the deed to your property to any individual or organization who promises to “save” your home.
Never make your mortgage payments to anyone other than to your mortgage company.
If you decide to use a modification company or agency other than a HUD-approved agency, verify they are approved and qualified to do modifications.

As added notes, loans insured or guaranteed by FHA and VA are currently being modified under other programs. And today, the House of Representatives passed, after modifying the original bill, a bill which would give bankruptcy judges the power to force lenders to lower the mortgage interest rate to the floor rate of 2 percent or lower the principal balance. Although I have my reservation about this bill because it could be exploited by bankruptcy lawyers and speculators, this bill is now headed to the Senate.

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Comments

33 Responses to “Understanding Obama’s Making Home Affordable MODIFICATION plan”

Understanding Obama's Making Home Affordable REFINANCE plan : SCC Real Estate UNCENSORED on March 10th, 2009 10:55 PM

[...] of the confusion came from the belief that the refinance and modification program were one of the [...]
Misty on July 16th, 2009 5:30 PM

We were told by our lender that we qualify for MHA program very exciting and the new amount is affordable. We are scared though at the end f our 3 month trail period we will get denied because we are about to file chapter 7 for our credit cards. What will happen to our loan if we either don’t file for BK until after trail period or we do file beforehand? Thank you
Ney on July 22nd, 2009 7:33 AM

Misty,

That is a really good question for your BK attorney. Nevertheless, the MHA Modification plan, as explained on this article, states that a successful completion of this 90-day trial period is defined as the borrower’s timely payments on the modified loan. Therefore, the timely payments made on a modified loan would have nothing to do with a bankruptcy case depending on which accounts were included in the BK.

If the MHA agreement has not yet been signed and approved; however, some of the required documentations the lender will use to qualify or disqualify a borrower includes the outstanding debt payments. These will be verified against the credit report. So, in my opinion and if the MHA has not yet been approved, the bankruptcy judgment may clear out most or all of the unsecured debt and consequently allowing the borrower to have more disposable income. This increase in the disposable income could help or hurt the chances to have the MHA approved.

It is my suggestion that you talk to the HUD approved agency that helped you qualify for the MHA loan modification program and with your bankruptcy attorney for a more detail review of your case.
Sandra Purcell on September 29th, 2009 4:35 PM

My question is: I applied for the modification loan and was told I was not eligible due to the fact that at the end of my current loan I would then have a balloon payment. I was then told within two weeks they may possibly be able to do some type of a refinance. Can this be explained with more detail?
Ney on September 30th, 2009 7:40 AM

Sandra,

Without knowing the details of the situation is hard to tell. However, a loan modification is not only a modification of the interest rate on the current loan. A loan modification can be a modification of several loan terms like: interest rate, amortization period, length of the loan and principal balance.

Additionally, simply because you were denied once for a loan modification that does not mean that you cannot request it again. I suggest that you contact a HUD approved agency to help you do the loan modification or contact NACA for the loan modification as well. These are all non-profit agencies.

A refinance would only be possible if you qualify and your home has enough equity to do it. Otherwise, no bank will want to put their money in a home that is “under-water.” On that same note, even within the same lender, no investor is going to buy a loan secured by a home that is “under-water.”

So as you see, the people who you talked to may simply be telling you about the refinance possibility because they don’t know if you qualify or your home qualifies (equity).
jobeans on October 26th, 2009 8:11 AM

We entered into a trial period for a modification on June 22,2009. As of today, Oct. 26, we still have not received our final modification paperwork. Our lender stated in a call today that we are in the final test stages one being the second of a net present value test. We passed the first one at the onset of our trial period, is there any chance we will not pass this one thus be denied our modification? Why is it taking so long for our final documents? Thank you.
MyHAMP on October 26th, 2009 11:56 AM

jobeans,

It’s very unlikely you are going to fail the second NPV-test UNLESS you have a change in income. If everything is the same since you started your trial, you should be fine. If you get denied, be consistent and ask for a reason. A denial at this stage is often an error. I know a case where the lender didn’t consider the second source of income of the borrower – so he passed the initial NPV and failed the second. They could straighten that out.
Ney on October 26th, 2009 8:23 PM

jobeans,

As the reader MyHAMP has stated, it is very unlikely that your loan modification request will fail if you already have passed the net present value test once. The net present value is used to determine whether the loan modification will provide the investor a better financial outcome than foreclosure.

If the terms originally set on the trial period provided a good NPV, and you have made your payments on time as agreed, I dont see why that NPV should change at the end of the trial period. However, without knowing the details of your situation, all I am doing is speculating about what could happen.

I suggest that you keep in touch often with your lender so that you are prepared should anything change.

Also, as the other reader commented, if a loan modification request is denied it does not mean it is the end of the world. Loan modification requests can be made more than once.

Finally, why is it taking so long for your final documents?……the process inside of the bank for a loan modification is often gogged down by the lack of qualified manpower and the demand for a loan modification.
trish on October 26th, 2009 11:32 PM

hello,
i applied for the govt home aff program…..my lender denied me saying i did not meet the 31% income…..i really dont know how to figure this out myself im not really sure….i have contacted non profit counseling serv so they can help but there are no returned calls….i called the lender and asked how much more income would they require to qualify and they did not want to give me any info….can u help….i owe 248k…..debt is $1073…..income is $2550…..taxes is $441 a month…..homeowners is $100 a month……how much more income to i need to qualify…..if i have to come up with more to qualify i will but i need a number please help thank you
MyHAMP on November 3rd, 2009 2:55 PM

trish,

Simply take 31% of the GROSS income of the borrower(s) of the property. If that amount is MORE than what your current payment on your first mortgage is, you don’t qualify because you are already paying less than what your payment would be under HAMP.
Ney on November 5th, 2009 7:30 AM

Trish,

If you read the section on this post titled “ELIGIBILITY,” it will give you an explanation of how the income qualification is done by calculating the Debt-to-Income-Ratio (DTI). MyHAMP gave you a simple and basic explanation of the same. (Thanks MyHAMP!)
Laura on November 18th, 2009 1:07 PM

I am in the final stages of possible approval for my MHA modifications. However, according to my lenders their appraiser has my home at a FMV of $175,000, and my priniple is $180,000, with arrearages of $10,000.00, that puts me under water by $15,000.00. How far under water does a house have to be before the program will deny or approve it? My house is in a great location, when the market started to plunge this area was one of the last to drop; I firmly believe that when the market starts to pick up our area will be one of the first to go back up.
Manuel on November 18th, 2009 3:00 PM

I am exploring the home affordable modification program. I have done some extensive research hopefully to make every effort to minimize delays and bumps along the way. The one question I would welcome input on is what happens if after a reduction to 2% my debt to income ratio is 86%. Does this automatically disqualify me?
Also, I have read that the program does now allow lenders to include a second note. Is this true?
And lastly, I have equity in my property that I can not access due to my unemployment status, but I read that the loan to value must be greater then 80%. Is this correct and can you tell me if there are exceptions? My current LTV on the first is 55% and including the second is 73%.

Thanks to all.
Manuel
Ney on November 21st, 2009 10:41 AM

Laura,

If you read this post under “Eligibility” you will see that the MHA modification program states: “There is NO minimum or maximum Loan-to-Value (LTV) ratio for eligibility purposes.” However, some lenders have provisions outside of MHA that have prevented some homeowners from modifying their loan for having too much equity.

Finally, simply because your area was the last area to drop in value does not necessarily mean that your area will be the first to pick up in value. Home values are directly affected by several factors. The most important ones are: supply, demand, employment, interest rates and the growth of that local market; remember real estate is very local.
Ney on November 21st, 2009 11:38 AM

Manuel,

If you read this post under “Eligibility” you will see the Debt-Income-Ratio requirements. If you need help evaluating income and expenses, contact a HUD-approved housing counseling agency. Counselors can help you determine how much of an interest rate reduction is required to get your payment within the 31 percent DTI guideline and the floor rate of 2 percent. Meanwhile, you can use this Financial Worksheet to help you get started.

Additionally, you should know that just because a loan modification is denied once, it does not mean that the borrower can’t apply a second, third and fourth time. Obviously, the financial situation of the borrower has to meet their requirements in order to get it approved so if a borrower is unemployed, they have no way of showing they can afford the new payments for the new modified loan.

The inclusion of a second loan modification within the MHA modification plan was added on April 28, 2009 allowing homeowners to modify their second loan.

Regarding the LTV requirements, please read the message I left for Laura on my previous comment. Nevertheless, I believe the changes to LTV requirements you are referring to is for the MHA Refinance program.
Michael C. on December 1st, 2009 6:02 PM

I am working with Bank Of america on a loan mod with the making home affordable program. They have approved me so far BUT they want me to send in a 3 month trial payment of $1370.51 and I must also continue to make my home owners assosiation fees ( insurance and maintenance condo fees) of $600 per month on my own. They said that they do not have to pay my assosiation fees from the monthly trial payments. They said I would be responsible for that on my own even though my gross salry is $5200 per month. The funny thing is my take home is $4000 per month so that will be 50% of my take home for my home. They think that they are helping me and that I should just go for it. I told them if they make my condo or hoa fees from that payment I will make to them at Bank Of America that it is fine, but it isnt that way. I think they are testing me to see if I can deal with a $200 month payment.What do you think about this situation? Is it fair under Obama’s plan?
Ney on December 8th, 2009 7:26 AM

Michael C,

I think something must of have gone wrong in your loan modification qualification. Under the rules for the MHA Modification program, the lender and you should have determined how much of an interest rate reduction is required to get your mortgage payment within the 31 percent DTI (including principal, interest, property taxes, insurance and HOA fees). Your payment for the loan modification should not have been calculated at 50 percent DTI.

Did someone assist you with the processing of the loan modification? Did you use a HUD approved counselor to help you with the loan modification?

My suggestion to you is to review the financial worksheet and other financial documentation you provided to your bank.
Berlin sanchez on January 14th, 2010 8:26 PM

I was apporved for the loan modification and part of my proncipal was defeer to the end of 40 years. I ffor some reason I paid of my loan in 5 or 6 years, what happends with this defeer amount? do I need to start paying it with interest or without interest?
Ney on January 18th, 2010 7:24 AM

Berlin,

It really depends on how your lender decided to modify your loan. My best guess would be that when they modified your loan, they fully amortized your loan (including the deferred amount) as a 40 year loan; therefore, you may very well be paying principal and interest every day the loan has a balance.

But it could have been amortized without the deferred amount. Which means that at the end of the life of the loan (or when the property is sold), the deferred amount would have to be paid with no interest accumulation.
Eve on January 19th, 2010 11:48 PM

I am about to receive my paperwork for a trial period and I am very worried to accept anything. I am current on my payments but what if I were to be denied final approval for whatever reason. Can they just take my house away even if I pay the amount originally owed for the 3 months? I’ve hear stories where they have in cases where people were already in Foreclosure before the trial period. I’ve been looking for language that would protect me in the Obama Plan regulations to the bank and it seems they could take my house and simply just notify me that I am denied.

This has been an 8 month ordeal for me already! I think there is some scamming going on by the banks as usual. These guys only know how to be predators. I hate to get in bed with them even future.
Ney on January 21st, 2010 7:26 AM

Eve.

A lender cannot foreclose on a home where the borrower is current with his/her mortgage payments. If a borrower was to apply for a loan modification under the HAMP program or the lender’s own loan modification program, the lender will decide whether the borrower will be allowed to modify the loan or not. The HAMP program was only put in place to give lender an incentive to modify loans for troubled borrowers. Nevertheless, lenders have a process they need to follow if they do decide to foreclose on a home. They cannot simply take over a home and kick the current living residents out.

It is unfortunate but is also true that many lenders are not very willing to modify loans or help process short sales easier and faster.

My advice to you is to contact a HUD approved agency so that they can assist you modify your loan.
robert on January 25th, 2010 6:55 AM

it has been over 1 year and i have over 200 pages of certified documentation with citimortgage-i have been told outright lies ,mis statements redirection about how credit reporting actually is interpreted by the bureaus and how fico would percive” payment arrangements during my trial period”. -i have made not only 3 but 4 trial payments starting in june-ciitmortgage stated they lost paperwork 4 times -i t wa sent in certifird mail and faxed 6 timws.even though it was clearly proven it was their fault they told me the modification process would be shut down if they did not receive it .i wrote numerous complaints to attorney generals office and occ.what was promised verbally was not delivered when the final modification packge .they tried to charge fees and did not waive late fees and tried to charge a title feeyhey even tried not to follow make home affordable guidlines by first reducing intrest rates(which all was needed in my case) and then go on to extending the term if needed -citimortgage took me from a 27 year note to a 40! the coupled a 2 point intrest rate reduction only to 4.125 % with and extension of term.watch out for this consumers they try nt to follow hamp ad then they tease you with a lower payment but your a slave to intrest in the long run and actually creates more hardship then you had before-they screwed up escrows.my bes t advice is you have to watch these lenders and servicers carefully and educate oneself with make home affordable-these enetities are in a uncomfortable alliance with the government whose mandates through make home affordable that runs contrary to their long term profit making- i believeevery loan modification should be audited to make sure it complies but the government won’t0these greedy entities like citimortgage ,aybe doing modifications but it is how there are doing them that troubles me watch them i can bet these lenders are extending terms when they do not have to when a sole intrest rate drop to a floor of 2% will solve 31% dti.everyone i have had to push push push and fight their lies and told them they will not tkae my home under these circumstances -they gave me terms that are disadvantageous to borrower and i told them screw screw you take my home -trust me they continued to modify and negotiate my loan. they know with me they will lose 50 -75 k on a short sale -you have the power they do not -and if a servicer gives you a hard time and your loan is invested with freddie mac and write a letter like i did to house finance sub committie washington dc.theuy want to know this.
robert on January 25th, 2010 7:00 AM

also citimoertgae when i questioned their calculation threaTened to shut down my process and they did.but lucky for mE i had a paper trail i wrote letter to president of citi and told them they put words in my mouth that i did not want the loan modification when i made it clear that questioning a calculation (which i eneded up being correct on) does not constitute rejection of any modifications -citimortgae are bastards to deal with and there customer service is awful-DOCUMENT EVERYTHING!
Ney on February 4th, 2010 7:45 AM

Robert,

While your situation is unfortunate and banks have been unwilling or unable to work out deals with loan modifications, I have to tell you that your modification seems ok to me. Obviously I don’t know the details of your situation but it seems like they did modified your loan accordingly.

They extended your amortization term so your payments could be lowered and they reduced your interest rate as well. If the loan modification was done correctly, your monthly payment should only cover 31% of your income.

Also, not all loans have been purchased by Freddie or Fannie.

Nevertheless, you make a very important point which is to document everything.
kim on March 5th, 2010 3:57 PM

i just finished my 3 trial payments in january 2010. my modification was approved feb 1, however i did not recieved the package until the 3rd of feb and it had stated it had to be notorized and returned by this same exact date?????? didnt make much sense to tell me i had to notorize, and send back this packet the same day and also tell me my first payment was due on feb 1st which was 2 days before i even got the packet??? anyway….question 1. they charged me fees to get my loan modified and im under the impression teh lender is not supposed to charge you anything??? 2. what happens to your 3 trial payments that you make…i did not see them applied to my loan anywhere or in an escrow account??? 3. i am paying through them 200 a month for insurance, can i get this on my own and save over 100 a month this way??? 4. i did not see my late fees waived and my account is still showing behind on my credit report, are they not supposed to waive late charges adn bring your account current??? any answers will do………..i have contacted the lender and waiting for response….thanks
kim on March 5th, 2010 4:19 PM

in addition, i am greatful i had a good person to work with and a great lender. i was behind almost.no joke…..2 years without them ever threatening to forclose or sending any negative letters other than monthly statements. AHMSI is a good lender or atleast they were to me. i have 4 children and lost my job, my payments were with impounds 3200 a month and now after modification i am paying under 1200. you could not even rent a home out here for that so i have no complaints what so ever other than the fees i was charges when i was told i would not be under the program rules. they were patient and always respectful and cordial. i wish all of you could have such luck with your lenders. but please keep it legit….this is for people who actually have suffered some changes in life. if you make the same when you did when you first got your loan than i do not understand how you say you cant afford it now but you could then unless you went out and bought alot of stuff maybe you shouldnt have.this is what started the problem we are having today…people living beyond what they can afford and then losing it all..in the end we all suffer for you being greedy. our housing market dropped more than 50%, banks and auto companies have closed their doors due to us not being able to pay them what we promised, and we are losing jobs that we have had forever because so many people are desperate and will work for half of what us oldtimers make. dont be greedy, be patient……
Ney on March 15th, 2010 7:36 AM

Kim,

The lenders that are working under the Making Home Affordable Modification Program (HAMP), as stated in this article, cannot charge a fee for the loan modification (see the section FEES AND CHARGES). Additionally, as stated on this same article, late fees will be waived.

The payments made during the trial modification period should be applied directly to the loan, insurance & taxes.

Any homeowner, regardless of the situation, has the right to choose their own home insurance carrier. However, if the homeowner does not choose an insurance carrier and puts a policy in place, the bank will choose their own policy which is very expensive.

It is my opinion that you contact your lender directly and tell them about the rules they should have followed according to HAMP and if you would like to put you in contact with an insurance agency with low rates let me know but you should definitely pick your own insurance carrier and not let the lender do it.
Lenders Slowly Signing On To The Second Lien Modification Program – 2MP : San Jose-Santa Clara County Real Estate UNCENSORED on March 18th, 2010 10:47 AM

[...] Department’s Second Lien Modification Program (2MP) which is a supplemental program to the Home Affordable Modification Program [...]
Cindy Small on June 9th, 2010 11:25 AM

Great post, The Home Affordable Modification Program is an excellent program. My sister received a modification in 14 days from her lender using this program. It’s good that you’re helping to get the word out.
NEY on June 11th, 2010 7:13 AM

Cindy,

Thank you for your visit and your input. I am glad your sister benefited from the HAMP program.
Melvin on June 17th, 2010 3:28 PM

Hello Im having trouble with my lender Wellsfargo.
We have been going through the modification process for 9 months and when we started we were only behind 2 months. Finally they told us we were denied after 9 months because we did not send in more info I have called them every week to ask if they need anything. Now we are about to lose our home to Wellsfargo. How can I get them to work with us I have followed all the steps but yet they give us the run around. I don’t want my wife and my 19 month old son to end up on the streets becuase Wells fargo is not helping us the took Tarp money but they are not doing us any good please help. We are both working and bringing in income but this process has us now in foreclosure. I was so desperate for help I paid a company to help me and they were not able to. Any advise on how we can save our home. We meet the requirements but Wellsfargo is not following through with any of this. I know other Wells fargo people who are not getting the help that was promised.
Melvin on June 17th, 2010 3:34 PM

Also I might add on the first modification we paid all our trial payments of 2400 dollars on time we all three payments and they are saying that money does not count for anything. The trial payments is more money than we could afford thats not 38% of our income. After going through all of that for 9 months they are about to take our house. What can we do
NEY on June 23rd, 2010 7:45 AM

Melvin,

The loan modification process can be daunting, complicated, and stressful. I understand your frustration, which reflects the frustration of millions in the same situation as yours.

However, you have to understand that accepting a loan modification under the HAMP program is not a legal obligation. Lenders are only under the obligation to review the homeowners financial situation to see if he qualifies for a loan modification. If the homeowner does not qualify, the lender has no obligation to accept it.

Since I don’t have the details of your situation, my suggestion to you is that if you feel that you qualify under Obama’s loan modification HAMP (see this post’s information) contact a HUD approved agency that can assist you in preparing the documents and throughout the loan modification process.

You stated that, in the middle of your desperation, you paid a company to help you with the loan modification. Unfortunately you were not able to get any good results. I should warn you that the loan modification industry is filled with sharks looking to make a quick buck out of homeowners’ desperation. There have been numerous cases of loan modification companies charging money upfront and not doing anything for the homeowners that sought their assistance.

If you do not qualify for a loan modification, your next step should be to consider doing a short sale. I understand that you do not want to loose your home and go through the process of moving out specially if you have such a young family as yours. However, you have to take a hard look at all your options. If one does not work, perhaps the next one will.

Regardless of the decision you may take, make sure you are educated and informed about the consequences one option may bring over another. Some of those could be legal consequences or they could also be taxable consequences. Of course all of this depends on the type of loan you have, the type of property, the state where the property is located, statutory laws, etc.