Home Affordable Loan Modifications Begin
If you’ve been following our coverage of President Obama’s Home Affordable Loan Modification program, you’re well aware we’ve been waiting over a month for loan servicers to get their processes figured out.
The program was announced March 5th and just yesterday, Ocwen Financial Corporation announced they have begun accepting applications. And…they’ve also increased the their staff by over 65%! So while you’ll probably have to wait, maybe it won’t be as long as you think?
Many industry experts agree that Ocwen’s processes and computer systems allow it to move more quickly than most traditional servicers, which is probably why they’ve been first to respond to the Home Affordable Modification guidance. As a matter of fact, according to Ocwen, their customized loan mod packages have a much lower re-default rate than most of the industry.
A re-default is when a homeowner has a successful modification to their mortgage and then goes into default again within a few months after they start the program. Services have been struggling to get their re-default rates below 50%. That’s why many servicers have such stringent requirements before they’ll modify a loan…they don’t want you to re-default and have to go through the whole foreclosure and/or loss mitigation process again.
But Ocwen has been able to get their re-default rate of only 24% after 6 months, while the industry average is 41% of modified loans re-defaulting within 6 months. Even though the vast majority of Ocwen’s customers have sub-prime loans, they have still acheived this remarkably low re-default rate.
If Ocwen Services Your Loan
If Ocwen is your servicer and you believe you qualify for a Home Affordable Loan Modification, you should download the paperwork you need to fill out and send in to Ocwen. This package also lists the verification documents you need to submit.
What Happens After You Apply?
According to the Ocwen web site:
Please understand that until you send us the required information listed in the financial package in the link below, it is not necessary to speak to one of our representatives because we will need to have this information in order to identify the possible options that may be available to you.
Do not delay! We encourage you to send this information as soon as possible. It is very important that the information is accurate, complete and legible. Please send copies. Do not send originals.
Once we receive the required information, please allow 10 days for us to respond. You will then receive a phone call or a letter from us.
What If You Don’t Qualify?
If you don’t qualify under the President’s modification plan, you should apply under Ocwen’s normal modification initiative. You can get more information at the Ocwen web site.
What If Ocwen Doesn’t Service My Loan?
If Ocwen isn’t your servicer, this is still good news for you because it means we’re one step closer to major servicers coming on line.
As I posted Monday, Bank of America/Countrywide expects to begin taking Home Affordable Modification applications within a couple weeks.
Foreclosure Moratorium Ends
Unfortunately, though, many lenders are beginning to process foreclosures again after several months of a foreclosure moratorium. According to the Wall Street Journal today, J.P. Morgan Chase, Wells Fargo, Fannie Mae, and Freddie Mac all say they’ve begun processing foreclosure actions again. The other major lenders probably won’t be far behind unfortunately.
I’d expect most of the major servicers to begin processing Home Affordable Loan Modifications before the end of April. If you get a foreclosure notice from your servicer in the mean time…contact them immediately.
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Tags: bank of america, fannie mae, freddie mac, Home Affordable Modification, jp morgan, loan modification, loss mitigation, workout plan
April 16th, 2009 at 1:02 am
I have a loan with Ocwen and I filled out the papers and while waiting
to hear a reply they put my house in foreclosure to be auction off
next week. They have scam a lot of people.
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Todd Temaat Reply:
April 18th, 2009 at 4:20 pm
Thanks for asking this question because MANY people think submitting a hardship package stops the foreclosure process. Many homeowners also believe that if they’ve been negotiating a repayment plan, forbearance, or loan modification with their lender and then receive a foreclosure sale notice that the negotiation is over.
NEITHER of these is true!
The loss mitigation process and the foreclosure process are two SEPARATE processes that run at the same time. One has no effect on the other until either:
1. The loss mitigation process ends. It can end with a loan modification, a repayment plan, or some other successful solution that will stop the foreclosure process. It can also end if your servicer determines you don’t qualify for any loss mitigation efforts. They should notify you at that point and then stop the loss mitigation process.
2. The foreclosure process ends. This happens when your home sells at auction.
Don’t stop pursuing the loan modification or other loss mitigation effort until the sale day comes. They can always postpone the foreclosure sale if the mitigation effort is nearing completion.
Best wishes and I hope this helps some…
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David Ortiz Reply:
April 18th, 2009 at 9:37 pm
It’s so true. We have been waiting for months to hear something. Finally, only after setting a sale date for 4/8/09, they stopped foreclosure on 4/5 and told us we are in line for a mod. We are still waiting to hear what it is.
I would like to thank you for all your info it is keeping me sane.
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April 16th, 2009 at 2:15 am
SAXON mortgage is my servicer and they have not been willing to work with me to keep my house that I have lived in for 20 years, I am a senior citizen and blind in one eye but have to be out of my house by JUNE 5 OR BE EVICTED. i do not think the goverment is doing enough to help homeowners
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Todd Temaat Reply:
April 18th, 2009 at 4:02 pm
Thank you for commenting. Your frustration with the situation and your servicer is understandable. You didn’t provide much information in your comment about what your hardship is or why you would need a modification after living in your home for 20 years. Theoretically, you should have a ton of equity in your home. I’m assuming that isn’t the case or you would’ve refinanced or something.
Even though it’s frustrating, neither the government or your lender can afford to keep people in their homes if they can’t afford to make reasonable payments. Loan modifications are not about letting people that can’t afford their homes stay in them longer. Loan modifications exist to make unaffordable loans more affordable. There is a difference…and the difference is in whether or not the banking system stays in tact or falls apart.
While you’re understandably worried about your home, your lender is concerned about all of the homes in their portfolio and staying in business.
Some communities or states around the country have programs like grants or low interest loans to help people in situations like your. I’d recommend checking with your city or county government offices or your state’s consumer affairs or consumer protection department.
You might also want to consider obtaining a forensic loan audit. It’s possible that your servicer made mistakes in your loan. If you’d like more info about this, please send an e-mail to service @ truthinforeclosure.com and we’ll e-mail it to you along with a checklist you can use to do a self-assessment of your loan.
Best wishes and I’m sorry I couldn’t be of more practical help.
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April 22nd, 2009 at 7:22 pm
I started a loan Modification in Feb. ‘09. I submitted all the paper work with a certified check of 1500.00. Before this I called my lender on a number of occasions with no help at all. It is now April my home is in forclosure (no sell date yet). The company hasn’t done a thing to help me and getting answers that I understand is very difficult. I don’t know what I can do. I live in San Diego and think the law is different state to state. Can I still try to get a modification? Or should I try a short sell? I am so confused and have lost a lot of trust. I feel that I got screwed over and am losing my patience and endurance to pursue any modifications.
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Todd Temaat Reply:
April 22nd, 2009 at 8:26 pm
You’re right in saying that foreclosure law differs from state to state. But the Home Affordable Modifications are part of Federal law so they apply everywhere.
You don’t really provide enough information for me to recommend any particular solution to your problem. It all depends on how much you owe, how much your home is worth, whether your hardship is resolved, and a bunch of other options.
You’re definitely not alone if you have trouble understanding what the servicers are telling you. many of them don’t even understand what they’re saying…they just know what they’re taught to say.
What I would recommend for you is to go visit a HUD counselor in your area. Take your mortgage statements and the hardship package with you and then see what they recommend. You can find a HUD counselor on the HUD web site.
Best wishes and I hope this was helpful. It’s easy to get frustrated and want to give up. That’s perfectly normal. But you have to persist if you want to succeed.
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Christie Reply:
February 28th, 2010 at 9:11 pm
Hi, My husband and I applied for a loan modification June 2009, due to hardship in his area of work. I was a student at the time but have since graduated nursing school. Well I have called my bank which is Trustmark National Bank, several times and left messages and never recieved a call back or a letter in response. Spoke with someone one in August 2009 briefly. I finally complained and got someone on the phone in December 2009, which was months later. I was told that my application was still in the process of being considered. I was also told by my counselor for that company in August that I should hold on to any payments until the loan modification process is over and a decision is determined. Well in december when I talked to my counselor, he stated that there should be a decision soon, after the 1st of the year. Meaning January 1st 2010. Well it is now February 28th, 2010, I got a letter in the mail from the loss mitigation department. The letter states that they have been unable to reach me by phone, and that I’m going into foreclosure. I have not missed any calls from them nor have I recieved any letters until now. It states that I have to contact them in 10 days to to see if I qualify for an affodable modification program, which confuses me because I thought that’s what we applied for in the first place. What does this mean at this point? Does it mean we were turned down, I don’t know how they can send a letter like this and this is the first attempt they have made to contact us.
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Todd Temaat Reply:
March 7th, 2010 at 12:49 pm
Unfortunately, you don’t have much choice except to call them and do what they ask. You may have to fill out paperwork two or three times and submit financial documents several times. Just do it. You can ask why, but it often does nothing but frustrate you.
With that said, though, keep good records so you can say “I sent you the paperwork you requested on such and such date by fax to this number.” If you mail things, make sure to get a return receipt. And always call to follow up on faxes. It usually takes them a couple days to get faxes into the bank’s system, but keep calling until they confirm they have it or tell you to resend it.
The foreclosure process and the loan modification process are two different things and they run at the same time. The lender may delay the process to allow you time to fill out paperwork, etc but they don’t have to. If you’re being responsive, though, they usually do.
I hope this helps.
April 22nd, 2009 at 7:23 pm
Why does it take so long to hear back from someone. My morgage company said that at this time they would not be able to help me. I don’t understan. I want answers badly
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Todd Temaat Reply:
April 22nd, 2009 at 8:15 pm
It can take a long time because they are really busy and have a lot of homeowners to deal with. Persistence is a key to success.
If you don’t understand why they’re denying you, ask them to explain it to you. And then ask them to put it in writing and send it to you.
Every lender/servicer is different and has their own criteria. But the fact remains that if you don’t have enough income to support the loan, you can’t afford the house and will lose it to foreclosure.
I don’t know if that’s your situation or not, but if it is, I’d recommend checking out 23 Defenses to Foreclosure or the Foreclosure Assist Network for info on legal avenues to defend your foreclosure.
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April 23rd, 2009 at 1:26 pm
I contacted my servicer (AHMSI)in Dec ‘08. I explained to them my hardship. I was told I qualified for loan modification, I just needed to fax over all of the required documents and a hardship letter ( I have disabled infant at home who requires frequent hospitalization).
After I faxed over all the information they asked for, I found it impossible to get this process started. I heard excuse after excuse. This went on for several months, then I was finally told I didn’t qualify because when I refinanced my home in Dec ‘06. I signed a loan document that stated my loan could never be modified.I asked for proof of this and of course I never reeived it.What can i do?
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Todd Temaat Reply:
April 23rd, 2009 at 7:07 pm
I’m sorry it’s been such a frustrating time for you and your family. I’d recommend two things. If they won’t talk to you, there’s not much you can do, but:
1. Try contacting a HUD counselor. Sometimes they can get things done you or other, non-HUD, counselors can’t.
2. Get a lawyer. Sometimes the only thing that makes them deal is when a lawyer begins talking to their legal department. You can find a local consumer rights attorney at the National association of Consumer Advocates website.
Of course, you should continue to try contacting them yourself too. Be persistent and don’t expect one phone call or one hardship package to be the solution. It usually takes months of dedicated effort. In my experience, this means at least one phone call a day and returning every phone call, fax, or letter they send as soon as you possibly can.
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April 29th, 2009 at 4:48 pm
I AM CALLING MY LENDER EVERY OTHER DAY. I GET A RECORDING WHEN I CALL FOR STATUS THAT THERE IS A NEGOTIATOR WORKING ON MY ACCOUNT AND NOT TO CALL UNTIL AFTER APRIL 30TH. THAT IS PROBABLY WHEN THEY WILL TELL ME I DONT QUALIFY AND SET A SALE DATE. I FEEL LIKE A SITTING DUCK
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May 16th, 2009 at 8:41 am
I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.
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