Home-Buddies

A Mortgage Loan Modification Story

Within our 3 years of business, we have helped hundreds of homeowners who were facing a foreclosure. No, we were not always successful at stopping the foreclosure and getting the client on a workout plan with their lender. But there were many times that we did succeed!

The following is a story about one of our successes and includes some of the difficulties that we often face when negotiating a workout plan with a lender.

October 17, 2007
One of our field agents has just spoken to a homeowner who is facing foreclosure. The Foreclosure Sale Date is scheduled for November 6, 2007. This gives us basically 14 business days to stop the foreclosure!

Some of the necessary/required documents are obtained from the homeowner at this time. (A list of required documents is available in our free step by step guide) We also get a general outline of what the homeowner’s situation is.

• We already know that their original monthly payment was $772.43.
• They are currently behind over 12 months.
• Their hardship is based on the fact that there has been a loss of income due to health and medical issues.
• They have about $20k equity in their home.
• They have been in foreclosure several times before and have been put on several previous workout plans, and they have defaulted on all of those plans.
• Their current re-instatement amount to bring the loan current is already at $14,368.79.
• They only have about $1000 available to put as down payment for a workout plan with the lender.

We fax the homeowner’s documents that we have available to the Customer Service and Loss Mitigation department at their mortgage company. We include our request for a loan modification, or any workout plan that the homeowner may qualify for. We do not have the hardship letter at this time. The hardship letter is very crucial. (example hardship letters)

We know that it will take at least 2 business days for our 3rd party authorization to be processed with the lender (and all of the documents we faxed) before the lender will be allowed to communicate with us at all on this file. The next several days, we are in contact with the homeowner trying to get the rest of the required documents (tax returns, bank statements, and their hardship letter).

October 24, 2007 – 9 business days left to Foreclosure
We have successfully received the rest of the documents from the homeowner and have faxed those to the same department as before.

We speak to someone within the Loss Mitigation department and we are told who the negotiator is that is assigned to this file. We then fax all documents to this particular negotiator. We know that it will take several days for the new negotiator to review this file.

We are told at this time that if the homeowner had been less than 12 months behind, that it would be easier to work this file because they would have already been able to be qualified for a repayment plan. And we were almost automatically denied for any workout plan because the homeowner does not have enough of a down payment for a plan with the lender.

October 29, 2007 – 6 business days left to Foreclosure
We do a follow up call directly to the assigned negotiator. She informs us that she has no update for us because she did not receive the documents. We fax everything directly to her again.

October 30, 2007 – 5 business days left to Foreclosure
We do a follow up call again directly to the negotiator. She needs several things from us ASAP:

• A better hardship letter from the homeowner that explains more specifically of why they were not able to keep up with the 3 different workout plans that they had in the past. They need to explain in more detail about the health and medical issues that they faced.

• The homeowner’s financial worksheet shows that they have a big surplus of income each month, which means that they should be able to afford to pay their monthly mortgage. Based on this information, they could be denied for any workout plan. Need to know what the real financial situation is.
• Need documents from the husband showing how much child support he pays out.
• Need documents from the husband showing a change in his income due to loss of work hours.
• Need a letter from the wife’s Doctor that states that she had to leave her job due to sickness and heart surgery.

The negotiator also lets us know, that she may try to set the homeowner up on a “temporary trial payment plan” because they have defaulted on too many workout plans in the past. This plan would be for only 3 months. The homeowner would have to show (prove) that they can and will make consistent payments. If they were to miss a payment, then the negotiator will Foreclose on the property.

We update the homeowner with all this new information and tell them how important it is for them to give us the extra documents that the negotiator needs.

November 1, 2007 – 3 business days left to Foreclosure
We fax the requested documents directly to the negotiator. She now informs us that she needs the following:

• A detailed explanation of who is who in the household. The new hardship letter has her confused about who the wife is, who the daughter is, who the 3 children belong to, etc.
• A letter from the wife and daughter that states that they give their permission for the lender to pull their credit.

We contact the homeowner and get the new requested documents from them and we fax them directly to the negotiator.

November 2, 2007 – 2 business days left to Foreclosure
We do a follow up call to the negotiator again. She tells us that the Foreclosure has been put on hold. This file is still in review for a loan modification.

November 5, 2007 -1 day left to Foreclosure
We call the Foreclosure Attorney and verify that the Foreclosure has been put on hold.
We call the negotiator and get confirmation that the file is still in review for a loan modification.

YES – we got the scheduled Foreclosure Sale Date stopped. But…
NO – our job is not over. We still need to follow through and get a workout plan approved, keeping in mind that a Foreclosure Sale Date can be reset at any time!

This story continues.

Barbara Partaka

Home-Buddies