What Do I Need to Know About Home Loan Modifications?

Has your American Dream become your American Nightmare?

Did you and your family work hard to save for a down payment and develop a good credit history so you could become a "home owner?" Were you careful to only buy the home that the mortgage brokers advised you could afford? But now, through no fault of your own, are you are the unfortunate owner of an up-side-down, under-water, negative-equity property?

Were you told when you purchased your home that the variable rate interest and the 80/20 loans you were offered could easily be consolidated into a single loan with a fixed interest rate after just a few years of positive mortgage payment history? And now you are being told by those same institutions that you do not qualify for refinancing because there is no equity cushion to protect the lenders? Too bad, so sad – for you, of course, not the lenders.

Are you now (and possibly forever) "trapped" in a home with a loan or loans you could not pay off if you sold the property because market forces say your home is not worth what it once was? Are you ready to SCREAM "STOP THE MADNESS!!!" Is your desire for a safe and secure roof over the heads of your children, your family, really too much to ask?

The Myth: Not to worry, the Federal Government to the rescue!

We have all heard the buzz. Not allowed to refinance your mortgage because of the real estate market bubble that burst? No problem, apply for a home loan modification. Apply for a Home Affordable Modification Program (H.A.M.P .) mortgage loan restructuring! It is quick, it is easy and you will be treated with courtesy and respect like the hard working American that you are deserves! Under a home loan modification the lender MAY reduce your principal balance to the current fair market value of your home, reduce your interest rate to as low as 2%, lengthen the term of you loan to 40 years (amortizing over a longer term greatly reducing your monthly payment) and forbearing arrearages that may exist at the time of application (https://www.hmpadmin.com/portal/programs/hamp.jsp).

What is that old saying? If it sounds too good to be true …

The Reality: Modification is only available IFF (that is, IF and only IF) you QUALIFY then you might be allowed the privilege of applying

Ask anyone who has looked into applying for a home loan modification and you will hear the same story.

You do not qualify to apply for a home loan modification if you are current on you payments (yes, you read that correctly – you must be behind on your payments to qualify for a modification) So … in order to preserve your good credit you seek to have your loan modified but in order to get your loan modified you have to intentionally damage your good credit in order to qualify for a loan modification? Hmmm …

You do not qualify if your present monthly mortgage payment does not exceed 31% of your gross monthly income.

Find out for yourself http://www.makinghomeaffordable.gov/get-assistance/explore-eligibility/Pages/eligibility.aspx

Even if you do "qualify" can you survive the inefficient, redundant and illogical processing of an application? There are thousands of stories of the horror of applying for a home loan modification and few, if any, expressing praise and admiration for the process.

In a nutshell, here is what you can look forward to:

• A process that can take up to a year to complete;
• Weeks, if not months, of silence on the status of your application;
• Being told you "qualify" only to be told later, after sending in volumes of documents, that you "do not qualify;"
• Being told the documents you have sent in never arrived or were out of date by the time someone got around to looking at them;
• Being told you have a missed a deadline you were never told existed;
• Never talking to the same "loss mitigation" representative each time you call in to check on your application; being told what the last representative told you was incorrect and now you need to resubmit all the documents to the new representative (who will not be available the next time you call in any way);
• Being talked down to as if you were a child and being threatened that your application would be cancelled if you do not kiss the lender's …

One young couple told the story of how they painstakingly chronicled each and every telephone call, each and every mailing, fax and overnight shipping and each and every minute and dime they spent applying for a modification. In the end, some ten months later, they were successful in getting their monthly payment lowered – by $8.00 per month.

Many others relate stories of shouting matches with loan modification representatives over documents they have proof were sent and received only to be told "if it's not in the file, then it doesn't exist – send it again!"

Is There a Better Way to Pursue a Home Loan Modification?

While "better" is a relative term, there are more "efficient" ways to pursue a home loan modification. A few lenders do participate in an Internet based "web portal" program that allows you to transmit documents instantaneously over the Internet and receive receipts that the documents are in fact part of your application file.

Derrick B. Hager, P.C. is a participating attorney through the portal and offers non-legal assistance in processing a modification application for a nominal fee. Please call the office for details on how will make our commercial grade hardware and software available to expedite the process.

What Are the Alternatives to Seeking a Home Loan Modification?

If your mortgage is underwater and your application is not accepted or you want to find another viable alternative, it may be in your best interest to explore filing for bankruptcy.

At Derrick B. Hager, P.C., Attorney at Law, we are here to educate homeowners on the best way to save their home. In many instances, Chapter 13 is a good option because it is the only legal mechanism that immediately stops a foreclosure action. A lender has no choice but to comply with the terms of a bankruptcy filing and give the homeowner more time to pay the arrearage on a property under a Chapter 13 repayment plan.

Derrick B. Hager, P.C., Attorney at Law, is considered a debt relief agency. We help people file for bankruptcy under the federal Bankruptcy Code and process home loan modifications for people whose lender participates in the web portal program we have access to. We invite you to contact our Fox Valley, Illinois, office today for bankruptcy assistance and to learn more about our home loan application processing services during a free consultation.

This website is an advertisement for legal services. The information presented should not be construed to be legal advice and does not constitute the formation of an attorney-client relationship.