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Tag Archive for 'loan modification'

Can't Refinance with Bad Credit? Maybe You Can Modify

Published by Gina Pogol on March 25, 2010 in Mortgage Refinance . 0 Comments

Times are tough, and if you had bad credit when you got your mortgage, you might still have bad credit and be unable to refinance. However, if your mortgage is causing you some hardship and you are in danger of defaulting, contact your mortgage lender about a loan modification.

Check out Making Home Affordable

If your mortgage payment (including principal, interest, taxes, insurance, and HOA dues if applicable) exceeds 31% of your gross monthly income, you may qualify. The HAMP Web page gives a lot more details. You'll also need to know if your bad credit mortgage lender is participating in HAMP. You can find that out HERE.

Even if your lender is not a HAMP participant, or you don't meet the program guidelines, you may be able to score a loan mod anyway. Better for the lender to modify your mortgage than to see the income stream dry up.

Lender May Meet You HAFA Way

An alternative to a HAMP modification is the new HAFA (Home Affordable Foreclosure Alternative) short sale program, which rolls out in April. That provides a formalized and streamlined procedure and timeline for short sales and takes the uncertainty out of the process. Should you wish to sell your property, you'll know up front what price the lender is willing to accept and your buyer can have a lot more confidence that the deal will go through.

Finally, try an FHA or bad credit mortgage lender. You have nothing to lose by filling out the form on this site, and you may find a company willing to get you a better interest rate than you have now.

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Borrower Kicked Out of HAMP for Making Payment Too Early

Published by Gina Pogol on March 18, 2010 in Foreclosure . 0 Comments

Yes, Indiana homeowner Lisa Stuart almost lost her home because she didn't know about an unwritten HAMP rule. She was put into a trial modified mortgage and set her account up to automatically make the payment on the 25th of the month. She was concerned that if she set it up to transfer on the 1st, when payment was due, that it wouldn't be credited because one of the trial payment due dates fell on New Year's Day. But GMAC mortgage wasn't impressed by her responsible attitude. Their collection department called her to tell her that she owed them $4,000 of would be foreclosed on, and that she has been kicked out of HAMP for making her payment too early. And that's not the only secret rule that can get you kicked out of the program.

Take your current housing payment -- principal, interest, taxes, insurance, HOA dues, and mortgage insurance -- and multiply it by three. If you have $1 more than that amount in your bank accounts, your trial modification will not be made permanent and the collection department will call. When one lender, Aurora Loan Services, was asked by a homeowner I know, "Well, you say we have $8,000 too much to get a modification, but the collection people want $9,000 from us. If we pay that, we won't have too much money. So can we then get a modification?" The representative answered profoundly, "I don't know."

A quick search on the Internet shows that many people are under the mistaken impression that "reserves" means the amount needed to pay all of your debts. But mortgage lenders don't care about your other debts, and they have no problem with you being unable to repay your other creditors, as long as you can pay your mortgage. reserves, for the purpose of mortgage modification qualification, is only amounts needed to pay your for housing for three months.

So my advice is that if you have too much money to qualify for a modification, consider using the excess to pay off other debt and get yourself some breathing room. It will make it easier for you to get your mortgage modification, and easier for you to honor your modified mortgage obligation in the future.

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Frustrated with Your Lender? So Are Some Judges

Published by Gina Pogol on September 08, 2009 in Foreclosure . 2 Comments

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.

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About Mortgage Credit Problems

Specializing in Bad Credit Mortgages… Because Life Doesn’t Always Turn Out Like You Planned. A sick child, a few late bills, or an unexpected expense can easily get you off track and your credit may suffer, but we don't think you should miss out on the opportunities available to everyone else.

Gina Pogol

Gina Pogol

About the Author:

Gina Pogol writes for an online media company about mortgage and finance. In addition to a decade in mortgage lending, she formerly consulted for Experian and other credit bureaus, and worked as a tax accountant for Deloitte. She has a BS in Financial Management from the University of Nevada.

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  • Gina Pogol: Yes there is. Check any updates you get in the mail from your card issuer, and look for changes like new fee policies....
  • Gina Pogol: Ye, we heard the phrase "skin in the game" more times than we could count (although one journalist made a valiant...
  • Gina Pogol: FHA allows you to qualify for a mortgage 2 years after a bankruptcy discharge. Keep in mind though that you must...
  • Gina Pogol: Rachel, it's not that hard and fast--paying the smaller ones and letting the larger ones go--for example, always pay...
  • Gina Pogol: Alan, thanks for the question. When referring to the $7,500, we are talking about Federal income tax, not property tax....