Home Affordable Loan Modifications Begin–Foreclosure Moratorium Ends

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.

Download Your Hardship Package Now!

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.

If you’d like to be notified when this happens, please sign up for site updates below.

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9 Comments For This Post

  1. cathy Says:

    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.

    Todd Reply:

    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…

    David Ortiz Reply:

    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.

  2. IRENE Says:

    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

    Todd Reply:

    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.

  3. Caroline Says:

    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.

    Todd Reply:

    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.

    Christie Reply:

    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.

    Todd Reply:

    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.

  4. Caroline Says:

    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

    Todd Reply:

    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.

  5. Lisa Says:

    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?

    Todd Reply:

    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.

  6. RENEE Says:

    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

  7. MerrY Says:

    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.

  8. Kathy Says:

    Ok, here is my situation. My husband and I have our primary house loan with Ocwen. First, we applied for the loan modification in January 2010 because we were paying two mortgages at the same time. My rental house (second mortgage) was vacant and we were preparing the house for sale. Because of increased expenses for both homes, we weren’t able to pay for our primary loan and didn’t make any payments since then. Ocwen also notified us that we didn’t qualify for the government modification program and so we then applied for their own modification plan. This month (June), we received a notice from the trustee that our house is being auctioned on October 7, 2010 if we don’t modify our loan or do something about it. We finally called Ocwen and spoke to one of the loan representative in the Home Retention Department and was told she will reviewed and work on our case. She didn’t give us a clear date or anything and was very rude. She also refused to answer any questions related to our reinstatement quote, payment arrangement, etc. She just kept teliing that our loan is in the process and she can’t tell us the final result or the status of how it looks like so far. So it wasn’t helpful at all and concerns us. To reinstate our account, it is $15,000 and we can’t make a lump-sum payment. It has also been 13 business days and each time I called her, she always gives me a bad time saying I keep addressing the same questions, which I am not. Should we go ahead and pay our mortgage as regular or wait until we hear from her? Is there anything I can do to remove us from the foreclosure status besides paying the lump-sum of $15k upfront? Also, do we need to re-submit any information to Ocwen regarding our status of being able to make payments since we are financially stable? What should we do?

    Todd Reply:

    You need to keep bugging the rep if they aren’t answering your questions…even if it makes them mad. It IS their job to answer your questions, after all.

    The foreclosure action and the loss mitigation effort run at the same time. They are two completely separate processes that run at the same time. The only way to end the foreclosure process is to complete the loan modification, sell the house, or go to foreclosure sale. Usually, if your modification is looking promising and the foreclosure sale date is nearing, they will extend the sale date…but not always.

    Paying the reinstatement amount should put you back to your old payment and original mortgage as if you’d never misses a payment. But, unfortunately, there are no standard terms in foreclosure. So while this is my understanding of reinstatement may be different than Ocwen’s. Whether you should pay your mortgage payments or not while their ‘deciding’ is up to Ocwen…every servicer is different.

    If your financial situation has changed since you first submitted your modification package, (which it sounds like it has), you should resubmit your paperwork…and Ocwen should be asking you to. If they haven’t asked for updated documents, you need to make sure they understand that your situation has changed and that the information they have is no longer accurate.

    Finally, you should know that any modification is a long and involved process and there are parts of it that your rep will not have very good insight on. This is because in most situations, there are multiple people in addition to your rep that have to look at and approve your package. First is the loss mitigation department, then the servicer management, and finally the investor. And once the package leaves Ocwen to go to your investor, Ocwen will lose sight of it and will not (in my experience) be able to provide you any information at all until they get it back approved or disapproved.

    Thanks for commenting and please post a follow up if I need to clarify anything or you have further questions.

  9. D Weaver Says:

    I applied for the Home Modification program last month and received a letter in the mail to suspened my payments for 3 months so that I can get my finances more on track, we are paying our bills on time every month but it is hard, I was layed off a year ago and believe me there are NO jobs out there, we are waiting to see if my husband is going to loose his job they just announced that they will be laying off 208 employee’s.
    I called my morgage company to find out what the letter meant and was told that we do not qualify for the make my home affordable program because our dept to income was to high, I thought that this program was to help people that are having trouble with lose of income and who are truley haveing a hard time. It seems to me that it is only going to help the one’s don’t have that much debt and still have money in the bank. if we had that then we would not be needing any help.
    our debt is not so high like some that keep charging and making it worse. when I was working we were able to maintaine it all but looseing a job can take a very hard hit on you.
    I just don’t understand why they are only going to help the ones that do not have that much debt. and this is how it was eplained to me.
    and suspending my payments for 3 month’s in turn will ruin our credit and at the end of the 3 months we have to make all those payments in one lump sum, now explain how this will help any one.
    when is the government going to really start helping people instead of only helping the select ones.

    Todd Reply:

    First of all, just because the bank says you CAN stop paying for 3 months doesn’t mean you HAVE to…you can still pay them. Second, I’d recommend calling them back and talking to someone else or going to a HUD housing counselor or calling HOPE Now at 888-995-HOPE. You can also visit the HOPE NOW website, the HUD Avoiding Foreclosure website or the Making Home Affordable website to get information for yourself rather than relying on what the bank is telling you.

    In the end, though, it’s solely up to the bank and the investors on your loan. Even if you qualify for the government programs, they can say no to modifying your loan. On the other hand, just because you get told that you don’t qualify doesn’t mean you can’t continually reapply if you want to. The criteria that banks and investors use to measure whether you qualify change all the time. So even though you don’t qualify today, you might next week. Unfortunately, but true.

    The hope behind a forbearance like your bank offered is that you’ll find a job within that 3 months and be able to afford the regular payments before your next payment is due. It helps in some cases, but in others it just adds a few more months until the foreclosure process starts.

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