MCP Help Blog

You need a mortgage modification. You checked the questionnaire on www.makinghomeaffordable.com and discovered that you meet the criteria for a modification under the Home Affordable Modification Plan (HAMP). So you call your lender, get your modification packet, and return it. And then nothing happens. For months.
According to a New York Times story, you are not alone. Loan modification is a voluntary option available to mortgage loan servicers, and many of them are systematically putting off homeowners’ requests for help. Even if you qualify underMaking Home Affordable, all that means is that you qualify to have the government pay your lender some incentives for helping you out. It doesn’t mean the lender has to help you, and it doesn’t mean the company has to do it in a timely manner either. And you may meet all qualifications for modification under the government’s rules–but not your lender’s. For example, if you have any assets, such as savings or retirement accounts, your lender may require that you deplete them before it will help you with your home loan. Or it may just stall, taking months to determine if it will help you and what form that help will take. According to the New York Times, as “they wait for an answer on whether they might qualify, homeowners are succumbing to foreclosure and bankruptcy proceedings and winding up in courts–at times in front of judges who are also frustrated.”

And some bankruptcy judges are taking the matter up directly with bank executives–even requiring them to come to court and explain themselves to the homeowner. In Arizona, Ohio, and Pennsylvania, judges have taken up the borrowers’ cause and called lenders on the carpet because of their foreclosure practices. The administration has threatened to change federal bankruptcy law to allow judges to modify mortgages in court if lenders don’t become more proactive. Lenders respond that such a move will increase the cost of mortgage financing to everyone.

So how do you get your modification through? First, be sure that you have provided everything the lender asks for–hardship letter, financial documents, and probably a worksheet as well. Unfortunately, once your package is in their system, there may be little you can do to expedite the process. Keep track of when you sent in your forms and call for status updates frequently.  And keep a log of when you call, who you speak to, and what you are told. Check your county records (many are available online) periodically to make sure your lender hasn’t started foreclosure proceedings and neglected to tell you. You may end up in bankruptcy court or foreclosure and will need all the evidence of your lender’s footdragging. At least judges are showing themselves willing to take on lenders and intervening when possible.