President Obama’s Home Affordable Loan Modification

This took a little longer than I wanted it to, but I wanted to be as thorough as possible for you.  There’s a lot of information in the documents I posted yesterday and I really recommend you read the ones that apply to your situation for yourself. I’ll start with the loan modification part of the President’s plan first since I know that’s what most of you want to know about.  If you want to refinance rather than modify your loan, check out our Making Home Affordable Refinancing article.

Home Affordable Loan Modifications


Who it helps: Homeowners behind or in danger of falling behind on their payments due to a financial hardship including rising payments due to resetting loans.

Who it doesn’t help: Homeowners with the income to pay their payments or those that don’t occupy the house in question.

Basic concept: Servicers and the Treasury Department are partnering to bring the payment for your first mortgage down to 31% of your gross income.  In mortgage terms, this means until you reach a 31% Front-end Debt-to-Income (DTI) ratio.

Participating servicers: Participation is voluntary except for Fannie Mae and Freddie Mac loan.  However, most major servicers will participate due to the program incentives, government involvement, and standardized modification model.  A list of participating servicers will be maintained by the Treasury department at once the program gets rolling.

Foreclosure moratorium: Fannie Mae announced March that it’s extending its foreclosure moratorium until it reviews all cases in foreclosure for program eligibility.  Most lenders are expected to follow suit, but are not required to do so.  In addition, once you’ve been qualified and your loan mod goes into the program’s trial period, your foreclosure will be suspended until you complete the trial period.

What will it cost homeowners: Zero.  All allowable costs are rolled into the modified note and homeowners should expect to pay nothing out of pocket.

How do I qualify?

1.  House must be owner-occupied, primary residence with a mortgage originated before Jan 1, 2009 that has an unpaid balance less than $729,750.

2.  Have a mortgage payment that is more than 31% of your monthly gross (pre-tax) income.

3.  Have a mortgage payment that’s no longer affordable

  • When figuring your mortgage payment, include principal, interest, home insurance, property taxes, and condominium or homeowner’s association dues (PITIA).  The 31% does not include private mortgage insurance (PMI) fees.
  • You can qualify whether you’ve missed payments or not.  The program is actually set up to encourage services to modify loans before homeowners miss any payments, but you are still eligible even if you have missed some payments.
  • Homeowners in bankruptcy can qualify
  • Homeowners pursuing litigation regarding their mortgage can qualify

How does it work?

1.  You contact your servicer (the people you send your payment to).  They are required to do a phone screening with anyone that requests it.  They will ask you the questions above and maybe a few others.

2. Your servicer verifies your income, mortgage payment, and hardship.  They will obtain a copy of your last tax return from the IRS to verify your income as well as request your 2 most recent pay stubs. You must also warrant that you do not have enough liquid assets to make your payments.

3.  Your servicer and the Treasury Department work together to bring your payment down to 31% DTI using the following steps (in this order):

  • Add any arrearage (accrued interest, past due taxes and insurance, late charges paid to third parties, and escrow advances) to your loan balance.  Note:  Your lender must forgive all late fees that aren’t paid to third parties.
  • Reduce your interest rate until you reach either 31% DTI or 2% APR.
  • If you’re still above 31% DTI, they will extend the term of your loan until your payment reaches 31%.  They cannot extend the loan past 40 years, however.
  • If you’re still above 31%, the lender will forbear your principal balance. This forbearance will become a balloon payment due on the maturity date of the modified loan, upon sale of the property, or upon payoff of the interest-bearing mortgage balance.  This forbearance will have no required payments except the balloon payment and will not accrue interest. The lender cannot forbear your principal to a point lower than the current market value of your home.

4.  Lenders/servicers can also use permanent principal reductions to lower your DTI as well.  They can do this as a standalone measure or at any time in the process above.  Personal opinion: Permanent principal reductions would not have to be repaid, so why would servicers choose this option?  I don’t expect to see many permanent principal reductions.

5.  Servicers are required to escrow your property taxes and insurance on this new loan even if they weren’t escrowed before.

6.  After your payment reaches 31% DTI and you sign all the modification paperwork, you enter a 90-day trial period.  If you’re current at the end of this period, your loan is permanently modified and you start your new loan term.

7.  Homeowners are eligible for an incentive of up to $1,000/year from the Treasury Department for paying on time.  This incentive will last for 5 years and will be paid directly to the servicer to reduce the principal balance on your loan.  “On time” for this incentive means no more than 30 days late.

8.  If you ever go over 90 days delinquent at any time during this modified loan, your modified loan will be terminated and you will be considered for other loss mitigation programs or foreclosure.

9.  Modified loans are not assumable

10.  If your payment can’t be reduced below 31% DTI, you will be considered for traditional loss mitigation programs.  This program offers servicer incentives to allow a short sale or deed in lieu rather than foreclosing.

Why would servicers participate?

Because they get paid to modify your loan (and paid more if they do it before you default).  They also get paid for every year you pay on time.  In addition, since this program only deals with first mortgages, they are offered an incentive if they work with subordinate mortgage holders to reduce or eliminate their liens. In the end, they (the servicing companies) will be paid more to help you stay than they will to foreclose in most cases.

Closing thoughts

I know this is A LOT of information, so if you have questions or comments, please post below.  But remember, what I say is just an informed opinion…you really need to talk to your lender. You can also check out yesterday’s post for links to all the official Treasury Department Home Affordable Loan Modification documents.

Finally…because I know you’re thinking it…I would expect most lenders to be able to start answering questions and screening you for qualification starting next week sometime.  This is a big change and they not only have to get it out to all their loss mitigators, they have to set up internal processes to handle a completely new, government-mandated (which means a ton of compliance monitoring) programs. All I’m saying is be patient with them and expect to be on hold for a while.  And don’t expect that every person you talk to will be an expert.  You need to be the expert so you’ll know if something they’re telling you is wrong.

Tomorrow’s post on the Home Affordable Refinance program will be shorter…I promise. Oh…I almost forgot…in my posts last week, I gave some bad info…these mods and refinances are good up to $729,500, not the $417,000 I said last week.  Good news for all you Californians and Floridians!

If you’ve signed up for site updates, you’ll be notified immediately when we post follow up articles. If you got an e-mail notification of this article, you’re already signed up! If you’d like to sign, you can below.

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Update: The article below is one of many I expect over the next several days that you’ll definitely want to check out…they list several major services and their plans to support the Home Assure Loan Modification and Refinance programs.

GSEs, Lenders Rally Behind Modification Plan – (added March 5)

GSEs Suspend Foreclosure Evictions Through March – Default Servicing (added March 9)

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69 Comments For This Post

  1. Angelo Says:

    I called my lender yesterday Homecomings Financial about the stimulus package and this is what they said, “We have not received the criteria as of yet regarding the stimulus package.” I said, “Well it went into effect today, so you should have it.” They said, “It did go into effect today, but our management staff needs to look at the criteria and this can take up to a week, but in the meantime we’re going to send you a loan modification packet to see if you qualify.” I said, “What if I’m disapproved with Homecomings loan mod criteria and you guys reject me, does this mean you guys won’t look at my criteria for the stimulus package.” They said, “No, it’s different, and we will look at both.”

    Nonetheless, no help or effort has been made by my lender thus far Homecomings Financial.

    I thought that I’d share this with you. Anyways, how should I fill out this loan mod packet out? They said, “I need to return it within 10-days.” What are your thoughts?

    Thanks for your help,
    Angelo – Sacramento

    Todd Reply:

    This is pretty much what I’d expect from servicers. The new package is a complete change to the way they do business so they can’t just implement it over night. I expect it to take 7 – 10 days for most servicers to figure out exactly what it means to them and get procedures out to their folks.

    The information for a normal loan mod and the new program is pretty similar, so I’d recommend you fill out the package and submit it with all the paperwork. I’d also make sure you submit an IRS Form4506-T with your package even if they don’t request it. This is the approval for them to pull your most recent tax return, which they will need to verify your income for the Home Affordable Modification program.

    I’d also recommend reading the article linked below thoroughly and the documentation on as well.

  2. Patrick Says:

    The modification program is it for 5 years of for the life of the loan. The one Obama just signed.

    Todd Reply:

    It is a permanent modification.

    The 5 year timeframe affects two things:

    1. The reduced interest rate will begin adjusting to your permanent rate at the 5 year point.
    2. You will stop receiving all incentive payments from the Treasury Department at the 5 year point.

    Thanks for asking

  3. Jessica Says:

    I called my current note services, Beneficial, who is owned by HSBC. Per the office yesterday, the person I spoke too (Linda) stated that since Beneficial is backed by the London bank, they are not doing anything with this, and that as of March 3rd, they are no longer servicing our mortgage note! I asked, well then what was I too do since I had no paperwork or notification that HSBC was pulling out of servicing currently held mortgages and she replied that she did not know and that mgmt had no idea what to tell clients except to go try and find another servicer that would refi the note. What are your thoughts on this? Since they confirmed my note is not held by Fannie or Freddie, AND that HSBC is pulling out of holding it, do you think another mortgage company will take it over to try and refi under Obama’s plan? We have been current todate, with no late payments since we refi’d from an ARM 3 years ago. I am getting ready to have a company wide pay cut inplemented (5% of annual salary) and my husband just found out he may only have 6 months left of employment w/his company after they were just bought out. What are your thoughts?

    Jessica – Richmond VA

    Todd Reply:

    Wow! Thanks for asking…a few things come to mind.

    1. If they’ve transferred your note to another company, they should be able to tell you who they transferred it to. They are also required by the Real Estate Settlement Procedures Act (a federal law) to notify you when changes in servicers happen. Visit this HUD site for more info. I’d recommend you follow the directions on the HUD page and send HSBC a Qualified Written Request to find out who is servicing your note. You may have grounds for a law suit based on this (and possibly other) RESPA or Truth in Lending violations. It’d be good to talk to a local lawyer familiar with lending laws to see. If you don’t know one, I’d recommend checking out the National Association of Consumer Advocates (NACA) web site…you can find a referral to one there.

    2. The owners/investors of your mortgage will not let it go unserviced. Did your last statement come from HSBC? If not, that’s your new servicers. If it came from HSBC and you can’t get anything else of of them on the phone, go to the MERS website and enter your information. If your loan is in the MERS system, which a large percentage of loans are, this will tell you who your servicer is. As a last resort, you can just wait and see who your statement comes from next month.

    3. The new servicer…whoever they are…is required to screen you if you call and ask them to, so yes, you can still quaify once you find out who to call.

    4. If you refinance, the title company is going to have to track down who your current servicer so they know who to pay and how to get the title correctly transferred. They may have better ways to find who the servicer is, but if they can’t find them either, you can’t refinance until it’s straightened out.

    I hope this helps…and please keep us informed of what happens.

    Jessica Reply:

    Thanks so much! I was finally able to get a hold of an actual manager thru a different customer service # (not the local Beneficial branch) and found that even though Beneficial is not servicing new loans/refi’s etc anymore, that the parent company, HSBC will be assuming the loan note. However, they will not be participating in Obama’s plan since they are backed by the London bank division…. So I guess my next plan of attack is to see if Countrywide or someone will work with us. Planning on getting all financial doc’s together tonight so I am prepared to talk to someone if I can get thru the lines! Will keep you updated on progress.

    Oh- on a side note, I did use the MERS website as you suggested. Weird thing was that they only listed my old Countrywide mortgage from 5 years ago (when we originally purchased the house on the ARM note), and note the HSBC mortgage that we have held since 2007). I guess since HSBC isn’t a state-side bank – they don’t participate in the MERS database.

    Thanks again!

    Todd Reply:

    You’re welcome…glad it was helpful. Stay persistent.

  4. Kevin Says:

    I’m having a hard time trying to figure out if we would qualify for either of the provisions in this. Our scenario:

    Filed Chapter 13 3yrs ago, wife lost her job last year, Trustee closed out the Chapter 13 in November for not receiving full funds. We are now roughly $18,000 in the rear on our mortgage (12 months worth). Our principal balance shows $162,000. The last we know, our home was worth $171,000 (6 yrs ago). My income is now enough to cover our “regular” mortgage payments, along with our monthly bills, but what about the arrearage?

    At first, I thought we might qualify for the “modification” portion, but really not sure now!

    Any thoughts or ideas?

    Todd Reply:

    As long as you:

    1. Live in the house

    2. Have an unpaid balance under $729,750, and

    3. Have a first mortgage payment that’s more than 31% DTI,

    You are eligible. Whether or not you qualify is up to your servicer. If you qualify, the arrearage would be added to the end of your loan.

    The bankruptcy is not an automatic disqualification if that’s what concerns you.

    Bottom line: call your servicer and ask them to screen you for eligibility

    Kevin Reply:

    Todd, I just want to say thank you! This sight really gives FACTS and Excellent advise!

    Thanks again, and I’ll be calling Countrywide to request a screening!

  5. Patrick Says:

    I was wondering will it hurt your credit just for asking for a loan modification. My problem is this a house is that was being flipped is now abandoned, my house was worth 577,000 is only now worth 488,000 my neighbors are worse off there 350,000 house is now worth only 178,000. My other problem is my original builder left and sold the lots and they are now putting in house worth 240,000 right on either side of me, I do think I qualify for loan modification but I am afraid it will really hurt my credit, We are going to adopt which is on hold and they check your credit. also what happens after the five years?

    Todd Reply:

    Patrick…sorry for the delay in getting back to you. I just wanted to make sure I gave you the most accurate info I can.

    There will be a ding on your credit if you modify your loan. But where you start really getting hurt is if you begin missing payments. As long as you haven’t missed any payments, the ding from a loan mod is easily recoverable and easily explainable. It also hurts MUCH less than a foreclosure.

    Hope this helps…if it doesn’t, please feel free to follow up.

    Zac Reply:

    How much of a “ding” will their be? My wife and I are in a similar situation as the original poster above.

    Also, an additional question… If I quit my job as opposed to being layed off – will this have an impact on qualifying? My wife and I saved a considerable amount of money before leaving my job to return and finish school, so we can afford to make our mortgage payments now. However, since the market crisis, I am concerned it will take me a while to become gainfully employed again – hence our need for a loan modification.

    Thank you for any information you can provide.

    Todd Reply:

    The “ding” on your credit report depends on whether you’re current when the modification is made and upon your lender. Each lender has their own criteria for what they report…it could show up as a negotiated settlement or they could just continue with the same account number, which would have little to no impact if you haven’t missed any payments. In the end, though, you have to do what you have to do…credit can always be cleaned up later. See my short sale articles for an example of what I mean.

    Quitting your job to go back to school was your choice, so it’s not an unavoidable loss in income. However, because you were responsible enough to save money before you did so and that isn’t what actually caused your hardship, it may not be a factor.

    It’ll come down to how well you write your hardship letter. You have to convince your lender that your hardship is that you can’t find work, not that you quit a couple years ago to better yourself and make yourself more competitive through education.

    Hope it helps and thanks for asking.

    Craig Reply:

    If you get the refinance modification (current on payments), is the “ding” less than if you do the hardship modification. Any idea how Chase bank treats this on your credit?

    Also, for the refi modification, do you still have to have a greater than 31% DTI, or is this the rule for the hardship modification?

    Todd Reply:

    The refinance is a complete mortgage refinance…just like you went to a bank down the street and refinanced. There will be no ding to your credit and it isn’t considered a modification. You’re simply replacing your old mortgage loan with a new one.

    There is no requirement for a certain DTI for the refinance program. As long as you have sufficient income and meet the other qualifications I listed in Home Affordable Refinance article.

  6. Roy Says:

    I called HFC on 3/6/2009 and they told me that they have not received the information as yet. I called today 3/11/2009 and was told that they will not be participating because HSBC which is their parent company is closing all of their mortgage related business in the US..I am very worried now because I reaaly need to take advantage of this program so I can stay afloat…I would appreciate any advise.


    Todd Reply:

    Roy…please see above for another homeowner (Jessica) that’s fighting the same battle.

    Even if HFC is going to stop servcing your loan, HSBC will (from my understanding) continue to service it. And while they may not be participating in the President’s plan, they do have regular loss mitigation measures. I’d recommend checking with them and seeing what other programs they offer.

    In addition, check with Freddie Mac and Fannie Mae to make sure your loan isn’t securitized by them. There are phone numbers and web sites to do this listed in this article.

    If you’re in a position to refinance, you may be able to refinance at what your home’s worth now rather than what you owe on it. It’s called a short refinance. Check out this article for more information. You can also listen to a call Brent Lane and I did about refinancing out of foreclosure.

    I truly hope this helps…please ask a follow-up if you have more questions.

  7. Xiomara Estevez Says:

    Before Barack Obama came with the solution for loan modification. I was told from a realtor that in order to make the bank to speak with me I need to stop making payment and be 3 to 4 month behind. He had charge me $1,500 to work with me and my lender. I know he has not do much to help me, he wants me to do a short sale instead. I have spoke with my lender about loan modification and they said that I need to sent the paperwork as soon as possible. Do you think that I qualify for this program?.

    Thank you very much!

    Todd Reply:

    If you meet the qualifications in this article, I recommend you fill out your lender’s paperwork and send it in to them. They will evaluate whether you’re qualified or not. You have nothing to lose by sending them your paperwork.

    Look at it this way. If you send in your paperwork, you might get to keep your home. If they say you don’t qualify, you can always pursue a short sale at that time. If you pursue the short sale now and are successful, you’ll have to leave your home.

    By sending the paperwork in you’re extending the time you get to stay in your home and give yourself the possibility of staying there for good.

    Thanks for asking.

  8. brendaa Says:

    i want to know if i have other loanscan i do fo modication like a car that i can not affor to pay for any longer but maybe if a loan modication it will help. i mad a loan i own then atleast 10thousdand dollar can i askthem for a loan modication?

    Todd Reply:

    Thanks for asking.

    The President’s loan modification plan only deals with home mortgages. You can ask your lender if they’ll modify your auto loan, but it’s pretty unlikely they will.

  9. John Says:

    Now what?!

    I was excepted into a Hardship program with HFC(HSBC) in January and could not make the first payment due to a death in my family. Now I am ready to make the payment March 13th and they say the Hardship is Closed and the only option is to Short Sale.

    Todd Reply:

    If you had a specific loss mitigator you dealt with during your first negotiation, try calling that person. If that doesn’t work, try asking for the person’s supervisor or get an attorney and have them call the legal department.

    However, if you read through the modification or repayment agreement you signed, it probably says if you default on the plan you’re not eligible to re-negotiate. That’s fairly standard protocol.

    If you don’t have an attorney, try the National Association of Consumer Advocates at

  10. Scott Says:

    My wife purchase our home in 2006 while she was still single and she is the only one on title to the property or on the loan as a borrower. Since then, she is a stay at home mom and her income is gone. All of the payments have been out of a joint checking accound for over 1.5 years now. Do you think they would modify the loan with both of us on the loan now, using my income to qualify for the modification?



    Todd Reply:

    Yes, Scott, I’m quite certain they would allow you to be added…or at least consider your income since your wife has none. The property deed and the mortgage on a property are only loosely connected, so the fact you’re not on the deed won’t really matter as long as your wife consents to everything, which I assume she will.

    I’m not sure what your hardship is, but you’ll need to be able to state it clearly and concisely when you speak with your lender and then document it in your loan modification eligibility packet. Read through the information above and at the web site to figure out exactly how you qualify and then call you servicer and ask for a screening. They’ll tell you how to proceed from there.

  11. Lisa Says:

    My husband and I are in the process of trying to modify our loan with HSBC. We received the modification package and are just waiting on our tax return documents from our accountant. I noticed the posts about HSBC on this topic. So, are we pretty certain they are not participating in the President’s Making Home Affordable program? The CSR I talked to was not sure and just directed me to their website, which has no info (that I can see) on the government program.

    So, we will be sending in the regular modification packet in the hopes that they consider us. My husband lost his job twice last year and was out of work for 4 months, so we definitely had a hardship. They already deferred a couple of payments for us but we’re paying way too much monthly. Our interest rate is 10% because it’s all we could qualify for at a fixed rate. Now, after falling behind on everything and making less money than we were before, we can’t refinance and can’t make such high payments. Do you know if they’ll consider lowering that interest rate or extending our term (which would lower our payments) even if they’re not participating in the President’s program?

    Todd Reply:

    Sorry for the delay in responding…I’ve been slammed with work these last few days.

    The answer to your question is yes, they’ll consider your hardship package. They’ll simply use different criteria than the President’s program.

    They’ll first see if you can afford a repayment plan, which sounds completely unrealistic, but they have to evaluate it first. Once they see that’s pointless, they’ll consider a combination of forebearance and a repayment plan. If that’s not workable, they’ll consider a loan modification if it’s allowed by your investor.

    Obtaining a loan mod in the traditional way is much like re-qualifying for a loan…it’s tough and if you don’t have enough income to handle the payment plus have a realistic amount left over for everything else, you won’t qualify.

    Why do you say you can’t refinance? I’d recommend listening to the Refinancing Your Way Out of Foreclosure teleconference I did with Brent Lane…it might give you options you didn’t know you had?

    Please feel free to ask follow up questions and if you need any helping framing the perfect hardship letter, please check out Hassle Free Hardship Letters.

    Lisa Reply:

    Thanks for your response. I’ll check out that link but I’m pretty sure we can’t refinance because our credit is shot.

    Right now, it seems we DO have enough income to handle the payment and have a little left over, as long as the payment was lowered. The very simple solution to that seems to be extending the term of our loan or lowering our interest rate. The ONLY reason we’re so tight financially right now is because of the size of our payment. Due to that 10% interest rate, our payment is about $1650/month on a $178,000 loan. That seems like an easy fix to me and that we would be the perfect candidates for a modification, but now I’m worried. Our hardship package is in and it’s being worked on right now. Apparently we’ll have an answer by next week, as they are verifying everything we filled out (financial form, itemizing all of our monthly expenses) with my husbands credit report. I truly hope they approve us because I feel like it’s our only chance.

    Todd Reply:

    Thanks for getting back to us!

    You really have nothing to lose by trying a short refinance…even if your credit is shot. The worst that can happen is you’re turned down.

    I’d recommend calling/e-mailing Brent. He can give you more detailed guidance.

    Especially if HSBC comes back with an unrealistic modification package, you need to be prepared. Assume they come back with something unrealistic and then plan your next step…will it be refinance…or a legal delay…or a short sale? Decide what you and your family want to do and then start down that road today. You can always stop those plans if the mod will work out for you. But you may not have time to plan everything if you just wait and see.

    Finally, don’t think you have to accept whatever they offer you. If it doesn’t make sense to you, ask them to explain how they developed their offer and what numbers they used. You can counteroffer by proving their numbers or assumptions wrong.

    Whatever you do…be proactive rather than reactive. And please come back to tell us what happens.

    Best wishes

  12. Pam Says:

    I found this very helpful.
    I’m hoping you can answer a question for me, and I know it’s your opinion. But you seem really informed. I have a loan that was orginated by Freemont Investment and Loan, Countrywide now services. HSBC is the investor on the First and Wells Fargo on the second.
    Countrywide said tha HSBC is not participating, but from what I read it is the servicers that participate, not the investor. We’ve been trying to do a mod since 2006 with no luck. We did Chapter 13, failed, the payments were too high, converted to seven, all in an effort to save the home, avoid foreclosure. BK has been discharged, and still having no luck with modifying. I guess my question goes back to the first part, is it the servicer, and Can you tell me if Freemont is or was a subsidiary of Countrywide?
    sorry it’s a book

    Todd Reply:

    Thanks for asking…unfortunately, servicer/investor relations are so complicated and intertwined, it’s nearly impossible to know. Each package of loans is controlled by a different agreement and can have different rules.

    Even with the President’s program, many servicers are worried about being sued by investors for breaking their agreements. Congress is working this issue, but right now. So while the servicer can modify your loan under the program, they may choose not to if they know the investor will balk.

    On the other hand, Countrywide is known for telling customers “No” because it’s the easy answer…even if it’s completely wrong.

    I don’t know anything about Freemont, but I would recommend you call back and talk to someone else. And if you don’t like their answer, call back again until you get someone that says yes or gives you a better explanation. I’d also recommend keeping an eye on the news to see if Congress passes legislation to protect servicers from lawsuits. If/when they do that, it’ll truly open the floodgates for modifications, I think.

    Finally, I’ll be putting out an article (maybe more than one) on forensic loan audits and how homeowners can use them to compel their lenders/servicers to modify their loan in some cases. If you’re signed up for our site updates, you’ll get notified when it gets published. On the surface, your loan(s) seem like they might have some of these legal issues. Until the post comes out, you can check out: 23 Legal Defenses to Foreclosure or Choose Foreclosure for more info.

    Thanks for asking…and your post wasn’t a book…but the answer sure is!

  13. Pam Says:

    I called CW today to ask about our mod, which they had alredy told my loss mitigator was denied. She informed me we were denied, and I asked about the President’s program. She put us in for that. Then I asked who is the investor, which up until today they wouldn’t tell us. I had on a letter from the lawyer that it was HSBC. The young lady told me it was Wells Fargo on both the first and second trust. When I questioned that, she said it ALWAYS has been Wells Fargo. And then the speil about no guarantee for a modification. But we’ve at least been submitted.
    I’ve contacted some local people about the predatory lending thing, and hoping to get some help on that. I KNOW there are issues there with the way that was handled.

    I appreciate the help

  14. Craig Says:

    I want to be considered for the Home Affordable Refinance. If my wife is not on the loan, can I still have her income added to the forms. I am with Chase and on their forms it list “Co-borrower”, My wife is not on the mortgage, but it was her job loss for 3 months that is creating the hardship.

    Todd Reply:

    Thanks for asking. Yes, you can include your wife as long as her income can be documented. They’re concerned with household income, not your individual income.

  15. Craig Says:

    So, I should include her information where it says “Co-borrower”, even though she is not technically on the loan?


    Todd Reply:

    Yes, because she will be a co-borrower on the new, modified loan.

  16. Rose Miller Says:


    I guess this day would never come, but now I feel I need help financially. I retired from my job in 2007 and due to my age 50 had to roll over my pension, I took a lump sum. Needless to say, I have had to take withdrawals which impact my future and my everyday expenses. Ie: paying taxes and penalties. I get $600 a month distribution, my husband was working full time but now has been on lay off since Dec. 2008. He has a return to work date for April 6th. This would be his second return to work his first one was in Feb. when they went back they were called into a meeting a laid off til this Apr date.

    My mortgage owing is $104,000 dollars my payments are $1100.00 a month not including taxes or insurance which I pay out of pocket. We own 2 vehicles with notes for approx. an additional $620.00 a month. That is it. I am currently behind in my real estate taxes and house insurance is due next month for the year.

    I am current on my home and vehicles, although at this point, I do not know for how long. I have my mortgage through hfc and I have contacted them but I do not qualify for a refinancing due to the loan to value on my home. I live in Michigan and they put the high value on my home now at $77,000 I would have to pay the house down in order to qualify for the 105% that is available.

    I have been reading on the home affordable modification program and wonder if I could qualify. What do I need to know and ask. If I can continue to make the payments on my home I have a term of 13 years left to pay. Please give me any suggestions other then walking away, which seems to be the normal response in this area. We have 7 foreclosures in my immediate 2 blocks that my home fronts on. I dont want to lose my home under any circumstances. Please advise.

    Todd Reply:

    Thanks for writing and welcome to the site.

    Considering the amount of money you have already invested in your home, I agree with you that you should do everything you can to keep it…even if it isn’t worth what you owe on it.

    It sounds like you may be eligible for the modification part of the President’s program. Call HFC and ask them. You can also check out the government’s new web site at: They have eligibility calculators and more information.

    If you aren’t eligible, I’d recommend trying to do a short refinance. This actually might be a better option for you considering the amount your house has dropped. Listen to the call I did with Brent Lane on Refinancing Out of Foreclosure.

    I hope this helps and don’t be afraid to ask again if you have more questions.

    Rose Miller Reply:

    I have been reading and is really overwhelming. I have contacted hfc and have started the process. I also learned they do not participate in Pres. Obama’s program. I hope I am doing the correct thing. My understanding is they will look at the documents that I submit along with a hardship letter. From there it is for them to review. I dont want to jump out of the frying pan into the fire, if you know what I mean. But at this point, I am in thier hands. Is there anything I should watch out for or ask for? Thank you for your help. Its means everything to our family.

    Todd Reply:

    Thanks for writing…you’re smart to be cautious. Now that you’ve turned your package in, there’s really nothing else you can do. I would recommend listening to the call Brent Lane and I did about Streamline Modifications. It’ll give you a few pointers to look out for even though your isn’t a streamline modification.

    If you’re accepted for a mod, go over the paperwork very carefully. Make sure you can make the payments they want you to make. You also need to make sure your payments don’t go up in the future. See if they’ve added a balloon payment at the end. Finally, you should check to make sure they haven’t taken away your ability to sue them for Truth in Lending or other violations or include the new mortgage in a bankruptcy at some point in the future.

    If they turn your application down, you should ask them to provide you a written explanation of why they turned you down and what guidelines they used to determine you weren’t eligible. Sometimes they use the wrong information…you have to make sure they didn’t.

    Best Wishes,

  17. Robert Says:

    My wife and I have a circumstance we are not sure about. We think we qualify for the Modification loan using the calculators from the government site. Our circumstances are that my hours have been cut by
    20% per week. My wife is collecting Calif. Disability Ins. (SDI) which
    will end in Nov. 2009. She collects a Workmans Comp Settlement that lasts for five years. She has applied for SSDI that has been declined once but she is pursuing a hearing that should take place sometime this year.
    Our income is going to be reduced in Nov. 2009 when her State Disability Ins. runs out. If she doesn’t get SSDI it will be dramatically reduced.
    Our question is this: Should we wait to file for the modification loan until we know whether or not she will be getting SSDI? Or, should we do it now and if we do it now will they consider the State Disability Ins.
    part of the gross income even though it ends in Nov. 2009? Also, is there a deadline that you have to apply for the modification loan?
    Any help with our questions would be greatly appreciated.

    Todd Reply:

    I would recommend taking the most conservative approach…file now if you qualify and assume you won’t get the additional SDI in November. Then, if your wife gets the SSDI, it’ll be extra money. That assumes, of course, that you still qualify with the huge reduction in income.

    As far as deadlines go, you have until December 31, 2012 to apply. So there’s plenty of time.

    With the uncertainty of your wife’s disability income, I’d recommend doing something sooner rather than later so you know you can stay in your home. Just make sure that as you’re applying, you explain that a portion of your income will be going away in November.

    Best wishes and thanks for asking.

  18. Jane Thomas Says:

    I need a rate mod with HSBC I have lost my job but will be receiving a severance. Will they add that into the income and then say I dont qualify?

    Todd Reply:

    The amount will have to be added to your income because it is income. However, since it’s a one-time payment rather than on-going income, it shouldn’t unqualify you.

    If you’re behind on your payments and the severance pay is large enough to cover that, they’ll probably expect you to just pay your past due amount and move on.

    If you’re not behind, your hardship package and letter will have to explain clearly why (even with the severance) you can’t continue to make your payments.

    I hope this answers your question…

  19. KATHY Says:

    We have a 1st & 2nd with HFC/ Beneficial 172,000.00 & 26,000.00. We have just been accepted for their 6 month temporary loan modification. This is the only program they offer. I have read alot about HFC not participating in the presidents programs and wonder what it is that I can do. My husband lost his job 8 months ago and has not been able to find work. I have a small business (dog breeder) out of our home that is barely getting us by. With the large decrease in income and no forseeable change in our situation I am seeking help in finding the right steps to take with our home loan. If we lose the home we will lose the only means of income because we need the home to run the business.

    Please help me save our home/business.

    Todd Reply:

    Thanks for asking. Unfortunately, if you don’t have enough family income to pay the payments and your lender isn’t participating in the Home Affordable program, there isn’t much you can do.

    I recommend three things:

    1. I know its obvious and easier said than done, but you need to raise your family income

    2. Investigate a short refinance if your property value has dropped. Listen to the teleconference Brent Lane and I did on Refinancing Your Way Out of Foreclosure. Hopefully it will help.

    3. Check out the links in other comment responses about forensic loan audits and legal courses of action. I am still working on the post(s) I mentioned above, but there’s lots of great info at both of those other sites I mentioned.

    Best wishes,


  20. Jennifer Says:

    I also have a mortgage with Beneficial. They offered me a hardship modification, but I have gotten nothing in writing. Should I??? Also, we are trying to sell our house now, should I disclose that to Beneficial?

    Todd Reply:

    Yes, you will need to get something in writing. They can’t actually modify your loan without you signing anything. Make sure you look through the previous comments for things to look out for when you’re reading their offer.

    You don’t need to tell them you’re selling until you have an offer on the table. And then only if you’ll be doing a short sale. If you sell for what you owe or more, it doesn’t matter to them…they can find out when they get the payoff from your buyer.

    Of course, I’d also check the modification agreement closely to make sure there aren’t any limitations on selling the home before you actually sell.

    Best wishes, I hope this helps,

    Jennifer Reply:

    I only got a phone call saying that because I was late with my January payment they did a “financial hardship” mod for me. In doing that, they said I could just pay March payment (skipping February) and a reduced rate of 5% for 6 months. I, like many others from Beneficial/HSBC, have an outrageous interest rate – 9.9% and because of a illness and death of a child 6 years ago, we have horrible credit, so there are not many who will refinance us. When we got this mortgage, we borrowed against our house to pay off medical expenses, so we thought we had no other options. So when we took it and had payments of almost $3000 at the time that was ok. We both had stable jobs with good income, but now, things have changed and we are not having as easy of a time.

    Beneficial told me they don’t do any other modifications either, but when I asked about loss mitigation, they said the delinquent payors were to speak to a person who would give me all the options – which to them is either pay past due amount plus the other of over $5000, or call HUD.

    My question, through all this story, is will HUD do something for those will not good credit? Are there options for Beneficial customers who make good money but don’t have good credit?

    Thanks for your help!

    Todd Reply:

    Thanks for explaining further. They’re using the term “mod” incorrectly. What they actually offered you is a modified forbearance plan.

    What did they say would happen with the 2 payments you miss? Do you have to repay them over the next 6 or 12 months?

    It also sounds like you were talking to the collections or normal customer service department rather than the loss mitigation department. The person you were talking to probably wasn’t able to offer you anything else. But that doesn’t mean Beneficial doesn’t offer other programs.

    Really nice and helpful of them, huh?

    Anyway, before they can discuss any other programs with you, you will have to fill out a hardship package, including a hardship letter, and submit your financial information and budget to them.

    This is where a HUD counselor can help…they can help you put all this info together and they can often contact the loss mitigation department directly rather than having to go through customer service first. Of course, HUD counselors are also very busy so expect to wait.

    When lenders deal with homeowners that have missed payments, they expect your credit to be bad and getting worse. What they want to see is that you have enough income to meet your obligations every month. If you can prove you have sufficient dependable and verifiable household income, the lender should work with you.

  21. james b Says:

    I have a question. It seems like alot of these servicer are not interested in modifying the loans unless it benefits them. So I’m resubmitting my package again to both countrywide and litton loan. Has anybody had a dealing with Litton Loan. I’ve read some reports about them not really not working with customers, but I’m in financial straight, meaning I haven’t missed a payment yet, but I’ve been living off my credit cards, and had to take a pay cut at work, 25%. Any advice is appreciated.

    Todd Reply:

    A few things you may want to consider…

    1. If lenders participate in the President’s Home Affordable program, they have to modify your loan if you qualify…whether they “want” to or not.

    2. Countrywide says they’re going to start accepting modification packages in a couple weeks under the President’s plan. The plan only covers first mortgages, though, so if Litton is your second mortgage holder, they’ll have to cooperate, but they’ll have an incentive to do so considering they won’t be able to recover anything if they foreclose.

    3. If you’re having trouble paying both your credit cards and the house payments, I’d recommend paying the house payment and letting some or all of the credit card payments go unpaid. After all, the credit card companies can’t take you’re home.

    Hope it helps…

  22. RENEE Says:

    I am currently in foreclosure. I have been trying to work with my lender since December. I am approx 12 months in arrears in the mortgage payment due to my husband’s medical bills. I submitted all my paperwork for modification and was denied. I have done this 3 times. Now they tell me to fax it again because they had a different amount for my income. I am on an adjustable rate and my payment amount has gone up. There is no sale date on my home yet. When I call CW they tell me that they are trying to put a package together and it is still be reviewed. I feel like I am just waiting for a knock on the door with the sheriff giving me papers for a sale date. Should I just file bk13 to protect my and my home. I am still working and have provided all the paperwork necessary. I am just sick sick sic. Can anyone help.

    Todd Reply:

    Thanks for writing. It sounds like you’re at your wits end, but I hope I can encourage you a little with my comments. I also want to make sure you have accurate information before you make any decisions.

    1. Even if you don’t qualify for a normal loan modification, you may qualify under the Home Affordable Modifications. If you look at the article I posted yesterday, you’ll see that Countrywide (which has been bought by Bank of America) plans to start processing these mods in a few weeks. They’ve also vowed to not foreclose on anyone’s home until they’ve evaluated whether or not they can be helped by the program or April 30th.

    2. I’d recommend faxing them the paperwork they’re requesting. While sending them the same info you’ve already submitted is frustrating, it means they’re still looking at your hardship package and they’re probably not pursuing the foreclosure action. They can do both at the same time, but it doesn’t sound like they are in your case. Have you received a Notice of Default from them yet?

    3. The sheriff won’t show up at your door to give you a sale date in most states. It will come in the mail in the mail if you’re in a non-judicial state. If you’re in a judicial state, the sheriff could show up, though. Regardless of who serves you this notice, though, you don’t have to leave your home until after the sale.

    4. Even if the home sells at auction, you may be able to rent it back from the new owner…see the article we posted a couple weeks ago.

    5. Filing a bankruptcy will not save your home. It may slow down the foreclosure, but it will not stop it. See this article for more info.

    I hope this helps. If you have more questions, please feel free to ask them here. Best wishes and please persist in your efforts.

  23. james b Says:

    I haven’t been late on a payment yet, but I am at the point where I’m using credit cards to pay my monthly expenses. I’ve talked to a couple of mortgage brokers who suggest that I should apply based on my situation. I’m afraid that if I start missing payments after I sent them my hardship package they will foreclose. What’s your take will they foreclose on me if I miss like two payments or is that un common in this market. Any general advice would be appreciated.

    Todd Reply:

    One of the Home Affordable modification plan’s primary goals is to reach homeowners in your situation according to the Treasury Department’s documents. They want to reach people that have a high likelihood of going into foreclosure if nothing is done.

    If you apply under the program and then fall behind, it probably won’t do anything but raise the priority of your application.

    While they don’t have to postpone a foreclosure action while they judge your eligibility, they probably will.

    In addition, under most mortgage agreements, they wouldn’t start foreclosure proceedings against you until you’re at least 2, but usually at least 3 payments behind. There are exceptions, of course.

    So go ahead and apply…you have nothing to lose. But you also need to have a plan if they turn you down. It doesn’t sound like you can stay in your home long term without a mod, so what will you do if you can’t get one?

  24. Diane Says:

    My question is my deed has my name as #1 borrower and my moms as #2 co borrower. I have been making my mortgage payments since day one and just used my mom as a credit back when buying home. I easily qualify on my own but wonder if they will add my moms income in and then I will not. I can show proof of this documentation and I am the only individual in the home. Do I just explain and also do I include her as 2nd borrower?

    Todd Reply:

    Thanks for asking. The way the program is set up, they consider household income, not just the income of the person making the payments.

    It will depend on your lender, but if your mother lives with you, they will probably consider her income “available” to help pay the monthly payment even if she doesn’t help. If she doesn’t live with you then it’s doubtful they’ll consider her income and I wouldn’t list her as a co-borrower since you don’t need to be concerned with your credit score for a loan mod.

  25. John Says:

    This site is an excellent resource…

    My situation is similar to everyone on this site. I have a mortgage being serviced through Homecomings Financial. I have gone through a seperation and divorce where I have kept the home and my two children.

    I originally had an 80/20 loan on my house becuase I was told this was the loan that best serviced my situation, even though I had 15% to put down on my house when I purchased it in May of 05. I paid the 20 part of the loan off after just 6 months. I was locked into the 80 part of the loan at 7.75% interest rate for three years, and if I refinanced it before the 3 year mark I would have undergone a 10% prepayment penalty. However, I was told that a refinance after the 3 years of perfect payments would be garanteed. Well…. Long and behold it was not a garantee…

    My interest rate is no 10%, and I have a payment of 1650.00 on a 129,000 mrtg. my take home income is 1750.00 a month.

    It is my understanding that the Obama plan would reduce my payment down to about 550.00 a month for p&i, ins, taxes, home owners dues. this would greatly help my situation and allow my kids to have a stable home…

    all of my monthly including debt including my mrtg with the mod if it goes through would be around 1600.00 a month.

    sorry for the long speech but I wanted the most complete answer to my situation.

    1. Can I qualify for the program?

    2. Homecomings Financial Claims they are participating, does this mean they have to do the mod?

    I appreciate your help on this

    Thank You

    Todd Reply:

    The easy answer first!

    If Homecomings Financial is your servicer, they’re the only ones that can modify your loan…you have to stay with them. I explain why in this article.

    If you’re asking whether they can choose not to modify your loan even though you qualify, the answer is no. If you qualify, they are required to modify your loan. But remember…eligibility and qualification are two separate things…keep reading below!

    The first thing that comes to mind about your first mortgage is that you may want to get more info about predatory lending because I noticed two indicators in your comment.

    1. They encouraged you to take a 80/20 loan even though you didn’t really need to. This means they charged you extra fees you probably didn’t need to pay and had their best interests at heart rather than yours.

    2. A 10% pre-payment penalty is outrageous and highly suspect. 1 – 2% is more normal and acceptable.

    For more info, I’d recommend you check out 23 Legal Defenses to Foreclosure or Choose Foreclosure.

    I don’t know what your home is worth compared to what you owe on it or if you’re behind on your payments. I assume you’re behind based on the financial info you provided, but you never said for sure. Anyway, have you thought about refinancing instead of modifying? It would probably give you a better, long-term solution. Check out the call I did with Brent Lane on Refinancing Your Way Out of Foreclosure.

    If you modify under the Home Affordable plan, your payment is based on your pre-tax, gross income, not your take home income. Other than that, though, it seems like you’re eligible. It’s up to your servicer to determine whether you qualify or not, though.

    The first thing I recommend is for you to go to the Treasury Department’s Making Home Affordable web site to determine your eligibility for sure.

    Then, if you’re eligible, call your servicer.

    I hope it helps and if you have follow-up questions, please don’t hesitate to ask.

  26. Mitch Says:

    I’ve been trying to get straight answers from the gov sites and Countrywide (a.k.a. brick wall of cluelessness) for weeks. While I have submitted everything for a home afford. mod., reading this site top to bottom from March. 4 on is the first clear, thorough explanation I have gotten yet. I finally get it. Thank you. I actually teach high school economics and have an MBA from a previous career path, but with all the emotions of foreclosure and the scripted, yet unhelpful, call center answers and CNN-gloss explanations, it has been really hard to figure out the facts. Keep up the great work.

  27. Kyle Says:

    Todd, I am afraid my income is to high to qualify for the Obama plan. Can you tell me what formula they use to calulate the 31%?

    Todd Reply:

    The 31% is figured off of pre-tax income. There’s a lot of discussion on how it’s figured in the comments to this post.

  28. dmackey Says:

    does this work for someone who is disabled and retired, trying to help my 76 and 78yr.old parents with health problems also. my condition is stabalized with proper medications. i have mort., electric, water,phone,insurances, medicines, pay for gas and transportation to doctors, etc. also my parents and others who need my assistance. please help, very seldom do i grocery shop, try to keep necessities. Help please

    Todd Reply:

    If you meet the eligibility criteria for the program, it doesn’t matter if you’re disabled or retired. Your hardship doesn’t matter either. As long as your income can pay your new payments and your bills, you should qualify. If your income isn’t enough, you’ll either have to raise it or lower your expenses to keep your home.

    Please remember, though, that qualifying you is up to your servicer and each one is a little bit different. This is only my opinion. The only way to find out for sure is to call your servicer and ask them if you’re eligible.

    Hope it helps…best of luck.

  29. Erica Says:

    Our bank offered us a modified forbearance back in December. We were originally told that if we made our new lower payments on time for three months that would set our new modification. After making three payments on time they told us they were prolonging the forbearance for another three months. They lowered the payments to 34% of our monthly income, they did this by lowering our interest rate and extending the term of the loan. Yesterday we recieved our packet for the making home affordable program to see if we qualify. I know you cannot give me a definite answer, but do you think we are eligible for this program? The program they were going to put us in before was a streamlined mod program through fannie mae. And why were we told we qualified under that program and then three months later they say no? Thank you for taking the time to answer these questions.

    Todd Reply:

    There’s a good chance you’ll qualify because the Fannie Mae streamline program and the President’s mod plan are both based on Sheila Bair’s (from the FDIC) modification plan.

    The reason they’re changing the program probably has to do with them wanting you to qualify under the President’s plan because then they get gov’t money for your loan and participation. If they did your mod in house, they don’t get the gov’t incentives. It’s a total guess on my part, but seems plausible.

  30. Robert Says:

    Here are some specifics about my situation, can you tell me how I would fair with a loan modification or if my wife and I would even qualify? Our present loan is an interest only loan with Homecomings financial, who by the way have said they are working with their borrowers on the modifications. Our principle is $459,000. Present value of our home is approximately $432,000. (This value was taken from a web site which online and we are not sure if this is how the bank would actually value the home). We are current on the loan. and have never been late. My wife has been out of work because of a work related injury and will not be returning. She was given a settlement for her injury which will be paid over the next 5 years. My job is stable but slow, I have been cut to 32 Hrs per week.
    Currently my wife is receiving California state disability payments but they will end in November, and if we qualify now we will be able to reduce other expenses later by using the extra income to payoff the some of our credit card debt.

    Now for all the monthly figures.
    mortgage $2532.00 does not include T$I
    taxes 204.10
    insurance 51.41
    other expenses apprx. $2300.00 Car loan, food, utilities, etc

    my monthly income $3744.00
    wife’s settlement $801.66

    These figures qualify us but will our income be to low to be accepted, and what would our payment be if we are accepted.

    Thank you for this site it has been very helpful

    Todd Reply:

    The bottom line is you have nothing to lose by applying except some of your time.

    If you’re current on the note, but in imminent danger of default, you’re who the President’s program is meant to help. If you’re eligible, you’ll be asked to fill out paperwork to see if you qualify. I could give you my opinion on whether you’ll qualify or not and how much your payment would be, but honestly, that’s exactly what it would be…a guess.

    With a situation as intricate as yours, I’d recommend one of two things:

    1. Go talk to a HUD Housing Counselor in your area…you can find one here. There’s A LOT of other useful info on the site too.

    2. Call your servicer and ask them if you’re eligible.

    I’m sorry if this wasn’t very helpful, but I don’t want to give you false hope or tell you something that turns out to be incorrect.

    Barb Reply:

    You have absolutely nothing to lose by asking. I was current, but my income has declined significantly over the last two years. I called Wacovia and asked about the MOD program and was told that I did not qualify because I was current on my payments…So I stopped making my payments and called again when I was 31 days late. Within 10 days I had a loan modification completed, no muss,no fuss! I guess I’m one of the lucky ones and am thrilled with the modification package they gave me. And best of all, they waived my late fee and did not report me late on my credit report!

  31. Shauna R. Says:

    Hi: I have learned so much from all your Q&A however could not find any answers regarding unpaid escrows. My loan modification specialist feels confident that my husband and I will qualify for the Obama Plan. While trying to modify before prior to the Obama plan taking effect our loan provider would provide us with a modification however required us to pay $9,000 first to bring our escrow account current. Under the Obama plan I have read that no money will be required upfront. Does that include unpaid escrows? Thanks

    Todd Reply:

    Thanks for asking. It sounds like you’ve been doing your homework…and you’re right, there’s tons out there to read.

    I found this on Pg. 7 of the Modification Program Guidance

    Step 2: Capitalize arrearage. Servicers may capitalize accrued interest, past due real estate taxes and insurance premiums, delinquency charges paid to third parties in the ordinary course of servicing and not retained by the servicer, any required escrow advances already paid by the servicer and any required escrow advances by the servicer that are currently due and will be paid by the servicer during the Trial Period. Late fees are not capitalized.

    According to that, I’d say they can be added to the loan rather than you having to pay them up front, but they don’t have to be.

  32. Shauna R. Says:

    Thanks for that info on the taxes. We hope they decide to capitalize on the money they have fronted by putting it into the loan.

    I did come up with another question. As I was reading the Program Guide I read about the second lien elimination payments. I do have a 1st and a 2nd with the same company (Saxon Mortgage). It was one of those finance 100% by obtaining an 80 first and 20 second loan deals. I understand that only the 1st will be modified under this plan. From what I have read they will be offering Second Lien Elimination incentives. Your opinion: under what circumstances do you think a second lien would be eliminated totally. Do you know what the incentives are? What are my options to get this second loan lowered? My back end DTI will not be more than 55%.

    Thanks again for all your opinions and advise.

    Todd Reply:

    If they can get your first mortgage payment down to 31% of your DTI, there’s little (if any) motivation for them to modify or eliminate the second. From their point of view, why would they forgive anything on the second when they’ve already proven your ability to pay both the first and the second.

    It’s the same reason I seriously doubt we’ll see any principal modifications under the current plan. There is simply no incentive for lenders to do that.

    Although that could easily change with different bills winding their way through Congress right now.

  33. Stephanie Says:

    GMAC refuses to do the Home Affordable Refinance Program even though we qualify and Freddie Mac is the backer on the loan. What do we do now?

    Todd Reply:

    Their decision depends on your income and whether it costs them more to foreclose or modify. If you have ample income, I’d recommend 2 things.

    1. Call them every day or two to demand they provide you with the figures they used when the said you didn’t qualify.

    2. Get in touch with a lawyer that’s familiar with foreclosure law. If you don’t know one, I highly recommend checking out the National Assoc of Consumer Advocates.

  34. Jacqueline E.Furlow Says:

    Dear Madam/Sir,

    My account is with BOA/Freddie Mac and i have just about exhausted all efforts to obtain information pertaining to the ‘making home affordable loan modification department’ in order to decrease my mortgage rate which is @ 6.25. It was explained to me that i do not qualify for refinancing, which i do not want anyway, because i owe over 105%, (111%).

    After my divorce in 2007, my mortgage went from $1365 to $1765 to $1468. I am surviving on what was initially planned for two incomes. I refuse to file bankrupcty and refinancing.

    Last year i was contacted by a refinancing firm, Wilson Lending co. In the Baymeadows area of Jacksonville, Florida, to refinance without any cost. Well…lo and behold after spending $400-$500 for an appraisal and xeroxing documents, etc, this company informed me that they could not refinance me. This company should be put out of business because they are a ‘scam’ and more than likely split the appraisal$$$$$$

    OK back to BOA-Bank of America.this morning after dialing 1-800-285-6000 i was spoke to; Chris, then to Melissa, then to Maggie, then to Teri, and finally to Jim. They all said the same thing, ultimately directing me to recall 1-800-285-6000. Wow! You-all really know how to ‘pass the buck’. Jim did inform me that BOA will not have any information on this program until mid-June-2009 because it is too new.

    Would somebody, somewhere, somehow,’cut to the chase’ and ‘stop killing the dead with the dead’ and provide me and others an answer?

    President Barack Obama reads 10 letters daily, hopefully he will read this one because i am mailing a letter a day until i hear from his office.

    Thank you.

  35. Mona Says:

    My mortgage company is Homecomings/GMAC. I acquired and sent the requested financial analysis forms for the Home Affordable Program and faxed them on May 5th. I tried calling Homecomings and kept getting the run around. Apparently, on May 20, my home was foreclosed (6 months from November 20) and they said I now was not eligible for the program, that I now had to speak with recovery regarding eviction. I haven’t received much of any notice from them over the last 6 months and when I do call, I get the run around. Is there something that I can do to stop them at this point, as the paperwork was submitted 2 weeks prior to foreclosure?

    Todd Reply:

    About the only things you can do now is talk to:

    1. A HUD Housing Counselor: Not sure how much they’ll be able to help, but they can sometimes get answers from lenders that others can’t. They can also advise you on redemption periods if they apply in your state and the eviction process.

    2. A Foreclosure Lawyer: They can (probably for a fee) talk to the lender’s legal department and determine if/how it was handled improperly. Depending on your state and whether the action is a judicial or non-judicial foreclosure, you may have recourse if they didn’t follow the proper procedures and notification time lines. Make sure you get an experienced foreclosure lawyer…don’t skimp. If you need help finding one, check out the National Association of Consumer Advocates.

    Best wishes…I wish I had better news for you.

  36. Michelle Says:

    I have a 2nd with HFC, they have stated that they do not provide Loan Modifications. We have qualified for a hardship assistance program hat lowers the payment for 6 months, but the difference between the lowered payment and the regular payment get put on the back end of the loan and accrue interest. Although I am making the hardship payment I am still getting calls asking me when I am going to be making my full payment amount. It is a 13.4% interest rate on about $150,000. Any way I can refi or modify my 2nd mortgage. BTW our credit is shot. I just returned to work from almost 3 years of not working. We are running 30 days behind on our 1st (with Chase), but I keep them aware of our situation, we modified that loan back in may ’08, we got behind due to a death in the family that used up all of our savings, and we just can’t make 2 months payment, they mentioned that perhaps a few months down the line there may be a way to make that payment a forbearance, but they have nothing except a loan mod program.

    How/where can I get help with my problem 2nd? With the decline in the market, our home is not worth what we owe on it, we are in a Los Angeles, suburb. Can you please point me in the right direction?

    When Chase did my loan mod they did not include any past due property taxes in the amount or begin an escrow account. I am 3 years behind on my property taxes, we pay whatever we can every month, but it is not much. what can I do to get the past due amount brought current and escrow the current amounts. The tax collector said I just have to either be paid in full by the 5 year mark or, be in a payment program. I was thinking to try to get in their payment program, but I don’t happen to have an extra few thousand dollars lying around to make the initial payment. Any ideas?

    Todd Reply:

    Thanks for writing…you’re not alone in your situation…trust me!

    Your best hope comes from the bill that President Obama signed on May 20th of this year that broadened the Hope 4 Homeowners act to include second mortgages. I’m researching an article on that for this week, so please watch the site closely so you don’t miss it. If you’re signed up for site updates, you’ll be notified by e-mail when it comes out. Just to let you know, though, it will probably be a couple months (at least) before lenders start implementing it.

    If that doesn’t work, I’d recommend a few things…

    1. Talk to Chase and see if you can still file for a Home Affordable Modification. I’m not sure if you can or not because you’re already in a workout program, but it can’t hurt to ask. If they say you can’t, ask them to reconsider your hardship package anyway.

    2. Talk to an attorney about the second…that’s got some predatory markers that you should have looked at. If you don’t know a foreclosure or predatory lending attorney, try theNational Association of Consumer Advocates web site. You can get a local referral there.

    3. If you get a Home Affordable Mod or (I think) a new Hope 4 Homeowners refinance, you’ll have to escrow your taxes/insurance and they’ll bring you current as part of the process (by adding the past due amounts to your new loan most likely). Otherwise, it’ll be up to you to be disciplined enough to do it on your own. You may be able to go to a local escrow company and have them set it up, but I’m sure it will cost you as well. I would recommend doing it yourself by taking the amount you’re past due and dividing it by the number of months you have until you hit 5 years…then add it to your current monthly tax payment. If you pay semi-annually, just put it in a bank account every month and take it out when it comes due. I know there will probably be late fees and such, but every little drop helps if you can afford to do this. If you can’t afford that, pick a lesser amount you can afford and be religious about sending it in every month on top of your normal tax payment. This will take a lot of discipline…more than the typical American homeowner has, but drastic times call for learning new skills.

    I hope this was helpful and please be on the lookout for the Hope 4 Homeowners article this week.

  37. Robert Says:

    I have filed for a loan modification through Homecomings Financial about 3 weeks ago. I was just wondering if you can tell me if there is a time line to expect any kind of response. We don’t even know if they received the paper work. Should I call to verify that or just wait till I hear from them? I realize 3 weeks is a short time but I would at least expect some kind of acknowledgment that they received the paper work.
    Thanks for the great site all you answers have helped.

    Todd Reply:

    Call, call, call….

    I’d recommend calling at least twice a week to check the status of the package. I’d also recommend calling before 11 am or between 2-4 pm if you can…those are typically the easiest times to get through.

  38. Becky Says:


    I also submitted my loan modification package with Homecomings Financial. I sent it April 22nd and have now called them a few times regarding hearing ANYTHING!! The first time they asked where I sent it-I told them to the address on the paperwork :) The next time they could verify it was received (when I asked). They stated it could take up to 60 days and a friend of mine told me this could take up to 4 months! Is that true? I know alot of people are filing, but do that have a time limit to put a modification into effect or do we just have time limits to submit it?
    Thank you for your time…

    Todd Reply:

    With as busy as they are, it could take several months. Unfortunately, it works much like the rest of the mortgage industry…they take as long as they want to but when they ask you for something, they need it today or everything will fall apart. Doesn’t matter if you’re trying to get a new mortgage, refinance, or negotiate with them…it’s always the same.

    Anyway…there is no timeline that they have to respond by. continue calling them a couple times a week until they request something from you or give you some news you can use.

    If you’re behind on your payments, ask them whether or not the foreclosure action is proceeding or not. Just because they’re negotiating with you doesn’t mean the foreclosure action isn’t running parallel. If they say the action is suspended or in a moratorium, ask them to put it in writing and send it to you.

    Hope it helps and thanks for writing.

  39. Erica Says:

    We were in forbearance with a lower payment and that period ended last month, now we are under review for a modification. Do we still make our lower payment we made during our forbearance while under review? They never said anything about making payments, they only said any forclosure proceedings would stop while waiting to hear back from them.

    Todd Reply:

    I assume you signed an agreement before you entered the forbearance. If so, it should stipulate what to do at the end of the forbearance period. Normally, I’d expect the agreement says you’ll go back to paying the same payment you were paying before the forbearance started. If you have the money to do that, that’s what I’d recommend doing anyway.

    If you don’t have the money to pay your old payment, I’d recommend calling them to see what they want you to do. Maybe they’ll extend the forbearance while they’re working the mod? After all, paying the smaller payment keeps you current and brings in some money for the bank rather than them not getting any payments, which is what would happen (I assume) if they wanted you to go back to your old payments.

    Thanks for asking and best wishes

  40. dan Says:

    I’ve contacted Chase 3/10 and faxed initial paperwork over. I call each week and most times I am told to fax more updated docs over. Well over 200 pages now. Needless to say, its June 19th and I was told to call back again in a week. Is this normal? If this is taking this long can one assume its because they are working out the details of the loan mod? Why take 100+ days to decline someone, doesnt that void the whole idea of reaching out? 4 months could put someone from just making it to way behind

    Todd Reply:

    I wish I could tell you they’ve been working on your package and a decision…but most likely they haven’t been. It’s probably a combination of them delaying to find out what the government programs are going to do, them have tens of thousands of others just like you they’re dealing with, and your case has probably changed hands numerous times within the company and each new case worker wants updated docs.

    There are a couple “levels” in most loss mitigation departments. The first one is someone (actually a group of people normally) that collect all your information and verify it. They also make sure you’ve submitted everything they’ve requested. Once they have everything, they forward it to the actual “case worker” or “loss mitigator” who will review all your info, put it into their bank’s computer to see what workouts are an option, and then contact you to begin negotiating your workout.

    Unfortunately, the first group of people don’t seem to care too much in general. They’ve got a mountain of paperwork and cases to work every day no matter what…so I think they lose sight of the fact that every case is a family and their home…it’s just another incomplete case file to a lot of them. This is why paperwork gets “lost” or is never received. I know I’ve faxed the same paperwork three or four times before they acknowledge getting it.

    All I can say is persist. It sounds like you’re still in the first level, which means they probably haven’t started any heavy analysis of your case yet. Keep calling and bothering them and faxing them what they ask for. It’s unfortunate, but you have little other choice unless you want to get a lawyer and threaten to take them to court…which is another topic altogether.

    Bottom line…don’t assume anything and get EVERYTHING they tell you in writing.

  41. Shauna Says:

    Hello. I have, what I hope is, a quick question…

    My husband and I brought our house in 2004. The interest rate is very low (5.25%) and the mortgage payments are manageable. However, it’s getting harder and harder to make the payments due to our own expenses. (i.e., credit card bills, car notes, daycare and home equity loan).

    My husband wants to apply for the modification (it will be through Wamu/Chase)to alleviate some of the pressure on the monthly bills, but I’m hesitant because I’m not sure what the outcome of the modification will be in the long run (how it will affect our credit and our standing with the mortgage company). Plus, I think with a few years of hard work and a little less spending, can pull ourselves out of the hole we are digging.

    Also, we got the mortgage under my husband’s income alone and I don’t want them to consider my income for the modification. Is that possible if we file joint on our tax return?

    Do you think the modification is a good idea? Please let me know your thoughts.

    Thank you.

    Todd Reply:

    Here are the facts. Out of control spending is not a hardship and you must have a hardship to qualify for the President’s program. If you have ample income to support your payments you won’t get approved for a modification. The modifications are not automatic and they don’t give you one just because you ask for it.

    You can apply for a mod through your mortgage company, but realize that it’s unlikely you’ll get approved (even if you use professional help). And every minute someone takes looking at your package is a minute they could be spending in an effort to help someone that truly needs it.

    Now…if you’ve had an income loss or an interest rate reset or medical bills or some other unexpected expense or loss in income…that could qualify as a hardship. But if your troubles are caused by simple overspending, you’ve got the right attitude…buckle down and stop spending while you can still afford to pay all your bills.

    Finally, if it comes down to paying the mortgage or paying other bills, pay the mortgage first. Your credit cards, and other obligations may harass you to pay, but they can’t take your home from you (with the possible exception of your HELOC, but they’d have to buy out your first mortgage to do it, which is unlikely)…your mortgage lender obviously can. Your credit may get trashed, but you’ll still have a roof over your head.

    Shauna Reply:

    Thanks for the info. I really appreciate it.

  42. Vanessa Says:

    Hello, we just made the second of four trial modification period payments and expect it to be complete and final in September. The problem is this: We are $60,000 in credit card debt and desperately need to file bankruptcy. Will we jeopardize our modification if we decide to go ahead and file chapter 7 while in this trial period state? Thank you in advance..

    Todd Reply:

    After looking through the program guidance and the Freddie Mac borrower guidelines, the only thing that’s required to complete the trial period is to pay your payments every month. Nothing mentions your other debt or bills.

    With that said, though, I’d really recommend calling your lender and discussing the situation with them. Or, as a back up, call a HUD housing counselor.

    In the program guidelines, it specifically says that being in bankruptcy does not automatically disqualify you from entering the program, so I don’t think it would eliminate you from the program once you’re in, but only your servicer/lender can truly decide this.

  43. Craig Says:

    We are expecting a second child in December, and with the second child, my wife will have to reduce her hours to part time to take care of the new baby. Is this considered a hardship?

    Todd Reply:

    In most cases, yes it would. Ultimately, it will depend on the lender and the rest of your financial picture. It can’t hurt to talk to your lender and ask, though.

  44. jim renfrew Says:

    i was denied a loan mod with ocwen.i know i meet all requirements for it.and when i called to ask why i did not get it. i was told there is no reason we just don’t want to give you one. how can this be

    Todd Reply:

    I’m sorry to hear they’re being so unreasonable. The first thing I’d recommend is to call and talk to someone else about it. If you get the same story, ask them to provide you with the facts, figures, and rationale that they used to base their decision on. They have to follow federal guidelines, so they have to have this info or you can take them to court.

    If this still doesn’t work, ask them if you can re-apply.

    If that doesn’t work either, I’d recommend talking to a lawyer that’s familiar with foreclosure law in your state. Often times, it just takes a call from your lawyer to their legal department to get the ball rolling. If you don’t know a lawyer, I’d recommend checking out the National Association of Consumer Advocates.

    You can also try talking to a local HUD Housing Counselor?

  45. dan Says:

    I wrote above on 6/19, well it’s a month later and now I am being told that it is under review (last 3 weeks)? How is this suppose to help anyone, I’m at over 120 days and still in review. Normally review means good, but these guys seems to be dragging their feet.

    Todd Reply:

    If you haven’t already, I’d ask them what “review” means and what the next step it has to go through is. Then ask them how long it typically takes.

    In the mean time, I’d give some serious consideration to what you’re going to do if they don’t agree to the loan mod. Discuss it with you family and develop a worst case scenario plan.

    You can also try talking to a local HUD Housing Counselor and having the call for you…sometimes they can get answers you can’t as a homeowner.

  46. dan Says:

    same dan as above. I called yesterday and was told “in review” again. SO i asked what does that mean and what is the timeline? I was told there is no timeline and that in review means they are plugging our data into the system to see which of the options is better(?). She also told me to keep sending updated docs. I said you have everything that is updated, why would I keep sending this stuff out, the last few times Chase told me what to send again and now I am finally in review. She said, well that’s what I tell people to do. I’ve faxed over 300 pages to these guys at a dollar a page. I’ve also contacted my local congressman to tell him what a mess this plan is

  47. Martha Says:

    Don’t be the next victim of so many loan modification fraud companies out there. The first thing you should absolutely do is: Contact the BBB and ask them if XYZ company is accredited with them and if so what is their rating. Second question is ask that XYZ company if they are registered with the Department of Real Estate in their State. Ask for License Number. Too many people have been taken advantage of and won’t have a home because the money they spent on the Loan Mod Company could have been used for a payment they were behind on. I suggest you also look up and investigate further.

    Remember that 100% money back guarantee is a huge catch. It only means it’s 100% money back within the first 3 to 5 days of you signing up with the LoanMod Company. Be very cautious.

  48. Elisha Says:

    In reguards to Martha’s comment about not being the next victim of loan modification fraud companies – does anyone know anything about American Platinum Financial Services? I checked the BBB and they are not BBB accredited which they said only meant that they chose not to seek accreditation due to the fee BBB charges for this. They have a B+ rating due to the fact they have not been in business for 10 years. Does this sound fishy? They claim to have a great reputation with banks and homeowners – not anything unusual. I was sent a letter by this business in which I responded for info and they think they can get me the modification. I am sceptical and appreciate Martha’s comment – gave me something else to think about. They say the 100% money back guarantee lasts the entire process and if the modification is rejected they will refund the up front costs then. I checked and they are not registered with the states department of realtors and they say that is because they are not in realastate – is this a necessity? I want to make the right choice so any other info or thoughts would be greatly appreciated. I want to do all the research I can. Thanks in advance!!!

    Todd Reply:

    Thanks for writing. I apologize for the delay in answering.

    I haven’t heard of the company you mention. It sounds like you’re doing a very thorough job of checking them out, which you should be applauded for. The only thing else I would do that you didn’t mention is ask them for some references and then call those people. Of course, they’ll only give you positive references, but at least you’ll be able to talk to some folks who have been through what you’re going through…and there’s a lot of value in that.

    There are a lot of people out there (like HUD) that say you should never pay upfront fees to mod companies and I don’t agree with that. It’s unfortunate, but often times people going through foreclosure reach out for help to these companies and then stiff them when it comes time to pay. I know there are a lot of companies that have stiffed people too. I’m not saying all companies are legit because there are way too many that aren’t. All I’m saying is that they have reasonable business expenses they incur on your behalf so you shouldn’t automatically take them off your list simply because they charge an upfront fee. People should investigate like you’re doing and then make an informed decision.

    It sounds like the company is open to answering your questions, which is a good sign. If you can’t get the references from them, I’d recommend posting something to the LoanSafe forum. There’s a good chance someone there has heard of or used them. But take that info with a grain a salt as well.

    I can also refer you to a company I trust if you’re interested. Please contact us by e-mail if you’re interested.

    Remember, though, NO ONE can guarantee you a modification. All they can do is collect your info, present it in the most advantageous way possible, and stay in contact with your lender. Their experience and industry contacts can help them know what to emphasize or downplay in your particular situation. But only the servicer and/or investor on your loan can say yes or no.

    Hope it helps.

  49. Robert Says:

    We submitted our paper work, and received a letter setting up 3 monthly payments, the letter states “at the conclusion of the scheduled payments below, we will review your situation to determine the best option for resolving the remaining delinquency.”. We took this to mean we have been accepted for a loan modification. We have since made 2 payments, and will be making our 3rd this month.
    My wife (“the worry wart”) started searching the web as to what to expect next. and found numerous forums about how GMAC has delayed the next step. Our loan was with Homecomings Financial which was then switched to GMAC.
    My question is, If we are doing the 3 payments does this mean we have been accepted for the modification, and if so is the amount we are paying now going to be our monthly payment. The letter seams to state otherwise, and the forums lead us to believe we may have problems finalizing the processes. Have you found this to be the case.
    Thank you for your help.

    Todd Reply:

    It sounds to me like the reduced payments were more of a forbearance rather than a modification. If it were a modification (even a Home Affordable Modification), there would have been paperwork that was labeled such so that everyone knew what was going on.

    And the fact that the letter says they’re going to review you situation again to resolve the remaining deficiency reinforces my belief. If they had modified your loan, there should be no deficiency to discuss because it would have already been figured in.

    The bottom line is that I’m guessing based on my experience. The only way to know for sure is to re-read EVERYTHING they sent you and then call them to get an answer.

  50. Kevin Says:

    Hello Todd,
    We have been trying for about 6 months to get a modification. Long story short: We have an 80/20 mortgage. the 80% is held by GMAC and the 20% is held by Ocwen. GMAC recently sent us a proposal for our payments to go from $2500 to $2300, only a $200 drop but doing the math that comes out to approximately 31% of our gross income. The problem is out 20 loan is $600 month, so our total monthly mortgage payment will still be $600 above the 31% mark. How is this handled?

    As a side note: After trying ourselves with no success we went through LIHP Long Island Housing Partnership (non-profit) and they submitted a proposal to drop the rate to 2% for the first two years, gradually going up to a max of 5% at 7 years AND extending the loan to 40 years. This would have dropped our payments $1000/mo initally decreasing to a $700 deduction @ 7 years. The woman told us many banks had been countering with that offer and she thought she’d offer that upfront to avoid back-and-forth and said we have a good chance to get it. We were ecstatic and thought we’d not only be able to save our house but actually have come quality of life too! We were quite disappointed when we got the letter from GMAC which only drops us $200/mo.

    Todd Reply:

    Well, unfortunately, the Home Affordable plan’s 31% target only considers first mortgages. In addition, since your mortgages are from two different companies, you have to deal with both companies separately.

    Have you tried talking to Ocwen directly about modifying the second mortgage?

  51. Jon Says:

    I am another HFC (beneficial) hard case and am about to start tackling this as a full-time job it seems. I was on their “hardship program” for 6 months but that simply isn’t enough. The 9.9% interest rate makes my mortgage just unaffordable given that I am self employed (for the last 10 years) and my income has dropped somewhat over the last 24 months. I am currently behind in my mortgage but have made payments to try to avoid going further behind.

    Reading what I’ve seen here about the nightmare HFC has been for most people I am wondering what the first step is. I’ve contacted 3rd party companies that “assure” me that they can negotiate the modification with HFC but that might be just blowing smoke. If HFC is owned by HSBC would it be worthwhile to go right to HSBC and try to get them to do something? If not, are there specific questions and responses I should give to Sally Call-Answerer to get past her to the powers that be so I can get something done?

    I am waiting to see some sort of good news from an HFC borrower to the effect they were successful in doing something beyond the “hardship program” they currently offer.

    What would be the first steps you recommend? I think that HFC would be an interesting case study for you to tackle given that they are so unwilling to help. If we can, as a group, try to push the right buttons and/or get them to actually consider helping people who need it rather than to accept a foreclosures, it would definitely make for good reading for all those who are scratchig their heads and pulling out hair with HFC today.

  52. Robert Says:

    You can disregard the above question. I received a call this morning telling me that we have been permanently approved for the modification. Great news for me and my wife. Thank you for all your help. You have been of great service and it was greatly appreciated.


    Todd Reply:

    That’s great to hear. Did the payment remain the same as your trial period payment?

    Also, I’d make sure they follow up in writing.

    Best Wishes…

  53. Robert Says:

    At this point the documents are being drawn up. I was told the payment would be approximately $3.00 more than the 2 monthly payments we made. We were told the papers would be here in a couple of days and when they didn’t show up we started to get concerned. I called this morning and they are still being prepared. So to show good faith we are going to send in the third payment as stated in the original letter. The gentleman I spoke with also noted this on his computer. This is a long drawn out process but well worth the effort.
    Again thanks for this site and all your help, I’m sure others will benefit as I have.

    Todd Reply:

    Please update us…did the papers show up and were they like the lender promised?

  54. krista Says:

    I lost my job in January and applied for a Home mod under Obamas plan with Chase. The mortgage is under my name and my husband lives with me in my house. We were denied and “someone” told us its because we listed my husband on the docs who ultimately is not responisble for the house. We called Chase and asked if that would have made the difference. Meaning if we had kept him off and based the info off of me as I am the mortgage holder. The person on the phone said she wasnt able to provide any info, but that she would recommend reapplying without my husband and showing proof of my unemployment would make sense for an approval. Make sense to you?

    Todd Reply:

    The only reason I can see why it would make a difference is if your husband makes enough to disqualify you from the program. You may as well reapply without your husband and see if you qualify.

    Be aware, though, they will still have access to all that old paperwork. It’s all considered information collected while attempting to collect a debt and can be used “against” you if they choose to.

    I’d also recommend taking a hard look at your situation. I don’t know enough about your particular situation to judge, but sometimes it makes sense to just sit back and wait for the foreclosure. Save the money you would use to make payments (if there is any) for a down payment on a rental after you move out.

    If you think the job loss will be short-lived and you expect to make at least what you made at the old job once you get hired somewhere, it probably makes sense to stay and fight. If not, it might be time to consider other options?

  55. Diana Says:

    My husband and I applied for loan modification in April 09 with a lawyer. It’s been 6 six months, and last week our lawyer’s secretary said that we needed to submit the letter of hardship and the last two pay stub again. It is normal? It takes that long to get an answer? When we hired the lawyer, he said that having a lawyer representing us, HSBC has to answer our request within 3 months. What a joke! Having a lawyer can I or should I call HSBC myself to find out what is going on? Or can I request the lawyer to write a letter to our lender? I read that we have to skip one or two payment so HSBC may take more attention to our application is that true? Our saving are running out, we may not be able to pay our next month mortgage. REALLY! REALLY NEED HELP AND INFORMATION! Thank You!


    Todd Reply:

    Unfortunately, HSBC is one of the worst lenders out there…although a 4 to 6 month wait is not out of the ordinary with many lenders. For example, my lender has had my short sale offer since May and it’s still winding its way through the “system”.

    Having a lawyer can speed things up, but not if your lawyer doesn’t call their legal department and persistently badger them into cooperation. If the lender doesn’t believe that you’ll actually take them to court, they probably won’t act any faster.

    It’s not uncommon at all for you to have to re-submit documentation several times. Some of this is because the lender wants to make sure your situation hasn’t changed since you put the original paperwork in…they know the process takes a long time too. But sometimes it seems like they’re just testing your resolve or like they’re incompetent. Unfortunately, there’s not much you can really do except comply.

    I wouldn’t be afraid to call them and badger them about the status of your package and whether they have all the required documents. No one will care about your home more than you do.

    Just make sure to keep your lawyer informed about anything you talk to the bank about. You might also want to tell them you’re going to begin calling and see what they say.

    I’d also ask them for a log of what they’ve actually done for you since you hired them…it might be enlightening for you?

  56. Diana Says:

    Thank you Todd !!

  57. eric d reed Says:

    I’ve been trying sence feb 2009 to get Home Affordable Modification 1st with LMS of santa ana (lost $3600) then with Taylor,bean & whitaker, then with NACA, now with AHMSI & RoundPoint i just keep getting the run around and i’m 41,000 behind on 1st and 12,000 behind on 2nd. i dont beleave lenders are working to help the home owners at all and i have no one to turn to.

    Todd Reply:

    Thank you for writing, however, we do not take clients. It sounds like you’ve tried every avenue available and no workout has been offered. Have the companies or lenders given you reasons for turning you down or just given you the run around?

    I erased your address info to protect your privacy.

  58. Paty Says:

    I applied for a loan modification with my servicer “Chase” in August. We finally received a reponse yesterday stating that they were putting us on a forebearance plan, for three months and then will re-evaluate if we qualify for a modification plan. We are current on our mortgage, never had late payment or missed payment, however, my husband has been out of work for almost a year now, and our savings is depleted. I have a couple of questions:
    1. I thought that the servicer was required to offer you the full details of the modification prior to the “trial period” or “forbearance plan”, and once you completed the trial period, you were automatically on the modification.
    2. How badly does a modification, and/or trial plan or forbearance plan hurt your credit? According to Chase, they can and probably will report us to the credit bureaus as paying less than we owe during the trial period, because during the trial period we would be paying approx $1000 less per month than we are right now. I asked if we paid the full amount of our mortgage during the trial period, if that would help, she said that it would be considered a breach in our contract with them, and the modification process would stop.
    3. Does forbearance mean that there will be some kind of balloon payment at the end of our loan, with either sale of the property, or complete payment of the loan?

    Thanks for any help

    Todd Reply:

    Thanks for writing…

    They aren’t required to show the details of the final workout at the start of a forbearance because the underlying facts and circumstances could change drastically if the 3 or 6 month forbearance period.
    It will probably affect your credit fairly severely because you’re not paying as originally agreed. We have a couple article here on the site about credit impacts. It won’t hurt as bad if you didn’t pay at all or if you eventually foreclose. But, honestly, I’d be more concerned with staying in the home than your credit rating. After all, if you stay and they modify your loan, you’ll have plenty of time to rebuild the credit. And if you have to leave the home, people are very understanding when you explain what happened. You’ll get asked about it every time you apply for credit without doubt, but it’s pretty easy to explain away if you can actually speak to someone that has the power to approve/disapprove you.
    If they modify your loan after the forbearance, they’ll just add the part you haven’t paid onto the new loan. If you just go back to paying your old mortgage, they’ll most likely try to work out a repayment plan with you by dividing the amount you owe by 12 or 18 months and adding it to your normal payment. If that won’t work, they may put it in a promissory note with no required payments until you sell the home or refinance.

    Hope that helps and best of luck!

  59. jason Says:

    I had heard that due to this plan being a disaster as far as helping people, that Obama will push this through even harder in the coming months. I also heard that part of this plan was going to be modified to focus on the unemployed. Anyone hear this?

    Todd Reply:

    I haven’t heard anything like that and don’t know how it would make any kind of fiscal sense to keep long-term unemployed people in a house they can’t pay for. If people can’t pay, they will (and should) lose the house. Just because the economy is bad doesn’t mean we should throw all the fiscal rules out the window.

    Now, if the job loss is temporary, there should be due consideration given. But with foreclosures taking 6 – 12 months or more in most of the country, I’d argue that 6 – 12 months is due consideration.

  60. Gia Kearns Says:

    We live in CA. My husband is self employed (he is a general contractor the company is an S corporation). I was self employed when I first took out the loan but then became a stay at home mom. The loan in in my name only. My husband has a loan for our “retirement” home (a manufactured home we purchased for retirement in AZ).

    I have since gone back to work for 2 companies part-time. Needless to say our income over the last couple of years due to the economy and building industry has drastically declined. We do qualify for the 31% rule but how do I know if our lender ING Direct is participating in the Presidents plan? I received paperwork from their home retention dept but not sure if they are looking to do a loan modification or ?

    My current income is about $2000.00 a month and our mortgage is $2,000.00 and we are not paying credit cards and own our cars.

    We are behind in our property taxes. Is this a problem for the Presidents loan modification qualifications?

    2 months behind in the mortgage payments.

    I plan on filling out the paperwork to start the process but do not want to jeopardize my qualification by putting my husband on the forms (his income is less than mine but he has the other house).

    Do you think I have to put him on the paperwork?

    Todd Reply:

    I think if you look closely at the instruction that ING sent you, you’ll probably find they want you to include your “household” income and bills. This typically means everyone in the household that helps pay the bills. So while the loan is in your name, they realize that you may not be the only one helping pay the mortgage every month. You could probably get away without putting him on the hardship paperwork, but do you really want to try to keep his income and the second house a “secret” from the bank?

    My recommendation is to paint the most accurate picture of your family’s financial situation as you can. Include all your income and both houses. Of course, this could bring about some tough decisions like possibly having to let go of or sell the retirement home so you can stay living in your current home. But the question to ask yourself is whether you want to maybe get by with telling them the absolute minimum amount of info you can and winding up with a plan that truly isn’t workable…or tell them everything and hopefully end up with one that will work long term?

    As far as finding out if they’re participating in HAMP or not, you can ask them or you can go to the Treasury Department’s lender page at: there’s a lot of other valuable info on this site too…spend some serious time there!

  61. Diana Says:

    Hi Todd,

    We applied for loan modification in April 09. We hired a lawyer to help us.Finally, we got and answer today from HSBC saying that we had been denied because my household income can afford to pay the monthly loan.
    Actually, the loan plus HOA and Tax is around 64% of our income. We never been late in our loan payment because we were using our life saving and right now our saving drained out. Can they denied our application becuase we were never late? The loan plus tax and HOA is 64% of our income that is why we apply for loan mod. So, what we should do? Our lawyer is telling us to apply again. Is that means that we have to wait for another year to get an answer? We don’t want to lose our home. We don’t have saving since we use it all to help us to wait for the answer. We are so desparate. Please advice. Thank you!

    Todd Reply:

    I would advise you to follow your lawyer’s advice and apply again…it can’t hurt anything and it might result in a modification of your loan? The reason he says (and I recommend) to reapply is because the situation is constantly changing and the same package submitted today might be approved even though little to nothing has changed since you submitted it a year ago.

    In addition, even though you don’t feel your situation has changed, it has…as you say, you have no savings now and you did when you sent the package in last time.

    If you’re in danger of imminent default (which you are according to what you posted here), they SHOULD process your modification package and approve it even though you haven’t missed any payments. What they will actually DO, though, varies by bank and individual situation.

    Finally, let me put your mind at ease a little (hopefully). If you stop paying, they’re not going to come take you home next month. It varies by state and I’d recommend checking out our state laws overview or state law summary for more info, but it will take several months before you even have to think about moving or losing your home.

    Let me give you my story…we stopped paying the payment on a rental house we have in Virginia last May. We’ve been in a couple short sale negotiations with the lender and a couple buyers since then. We received a Notice of Default after a couples months, but that’s it. We had a couple months of harassing phone calls, but once we got the collections department and the loss mitigation department to talk with one another, those calls stopped too. No one’s even talked about foreclosure and it’s been 10 months now since we’ve paid a payment.

    All that to say I would recommend you stop paying your mortgage and start saving your money again. If you end up saving your house, you could need it as part of the modification plan (shouldn’t under HAMP, but may under different programs) and you WILL need it if you lose your home to foreclosure. You could have 6 or 8 months of house payments saved up that would allow you to move into a nice rental or something. I know it’s not ideal or pleasant, but you need to make sure your family is taken care of.

    Hope it helps and thanks for writing.

  62. Carla Says:

    We resently received the paperwork to start a loan modification with BOA. I can’t find any information about what will happen if we aren’t approved at the end of the 4 month trial period. Will we be required to pay the difference in the original payment and trial mod payment amount? Also, during the trial will we be reported as being deliquent since we will be paying less then the orginal payment amount? And lastly, if we haven’t received an offer or any notice that we have been approved by the end of the 4 months, which payment do we make, the original amount of the trial period amount? Thank you for any help you can give us.

    Todd Reply:

    Thanks for asking.

    I’m going to caveat this answer with the fact that what I give is only an opinion…what you’re bank says is what will happen. Hopefully the two will match but they may not.

    First of all, they won’t put you into a trial unless they’ve approved you for a mod. They run all of your numbers and consider your application and then if they approve the mod, you begin paying the new, modified payment. The ‘trial’ is just the first few payments of your new loan.

    If you make all your payments, the trial converts automatically into a permanent mod…you don’t have to re-qualify at that point.

    Did they offer you a reduced payment while they’re considering your modification package? If so, that could be what’s causing your confusion.

    The best way to find out is to call and ask them…if you can actually get someone on the phone. Hope this helped.

  63. Rod Says:

    The bank says I can’t have a Truth in Lending or Good Faith Estimate ( FAQ #3 says I can)prior to entering into and completing the modification trial period. I want to make an informed decision. How can it be that the law is side stepped in this situation. I am current on my payments but unsure of the future. Would Pres. Obama sign for a loan without knowing the terms or take the credit ding without having the loan info? How do I know that it won’t be a 40 year loan and cost me big $$$ in the end? What can I do I don’t have much time to decide and have no loan info to help me. Am I the only one concerned?
    Why doesn’t the Truth in Lending law apply?
    Is there anything I can do to get this info prior to entering the trial period?

    Todd Reply:

    I just did a cursory search of the FAQs, but the only references I see to Truth in Lending statements have to do with Home Affordable Refinances, not Home Affordable Modifications.

    In the end, though, you either need the mod or you don’t. You can either afford to make the payments or you can’t. If you need the mod, can afford the payments and want to stay in the home, what other choice do you have except to accept the terms?

    Since you’re just entering the trial period, the bank has not actually modified your loan yet. And assuming you successfully complete the trial, the payments you get may not be the same as your trial payments. It’s all extremely confusing and more complicated than it should be.

    As you’re nearing the end of the trial period, I’d continue to hound your loss mitigator about getting the details of the loan so you know what they’re offering you. They ‘should’ provide it, but…

    Hope this helped and best of luck.

  64. Jared Says:


    Thanks for your time. I’ve been looking for clarification on this for some time, but still can’t seem to find a straight answer. Here’s my situation as simply as I can put it: My wife is the sole borrower on our note. She bought the home in 2007 (we were dating) and I am on the title (signed one document at closing), but not the note. We married in 2009. We finally received the Request for Modification and Affidavit form after nearly 9 months of trying. We quit making payments to try and force the banks hand a little bit. Do I have to be listed on this form as co-borrower or have my income or debts listed? We qualify based on my wife’s income and debt. The mortgage payment is around 54% of her gross monthly income. If we add my income, the ratio goes down to 31%. I don’t want it to seem like we are hiding anything but the truth of the matter is she is the only borrower on the note.

    Todd Reply:

    If you look at the guidance for the HAMP, it says that “household income” is what’s considered during qualification. So that means everyone in the house…not just the person actually on the loan.

    You don’t have to be a co-borrower on the new loan, but they will want your income and expenses included.

    If you want a third opinion, I’d recommend calling a HUD Housing Counselor.

  65. Tonia Says:

    Ok, so I understand that the your credit will be affected if you are accepted. But what happens when you do the qualification process, is your credit report affected then. I am nervous because I don’t want to be denied and then there be a mark on there for no reason. Are you familar with the program BOA announced recently??

    Todd Reply:

    They will run your credit when you apply for the mod, but it “shouldn’t” hurt you if you’re denied.

    Here’s my reasoning…usually if you apply for credit and are denied, that can be discovered because you have a credit inquiry from a company that you don’t have a credit account with.

    But…you already have an account with your mortgage lender and it’s not uncommon for lenders to periodically run credit anyway. So, applying for a mod would just look like a normal inquiry as far as I know.

    But I’d really recommend not applying unless you truly need a modification. And if you truly need a modification then what happens to your credit should be a secondary concern to keeping your home.

    If you’re applying simply as an attempt to lower your payments, I’d recommend against it. First, it probably won’t work. Second, it’s a TON of time and trouble for something that probably won’t work out. And, probably most importantly in the big picture…you’ll be taking time away from someone that actually needs the modification.

    I’m not sure which B of A program you’re talking about so if you have more info, please reply and I’ll do some investigation.

    Tonia Reply:

    Thanks for the info, since 2007 we have been faced with lay offs here in Michigan and for the last 6 months straight. I have been borrowing money from Peter to pay Paul it seems like. The hole is getting deeper and deeper, I have managed to keep payments on the house within the grace period, not by the 1st though. The program I was considering was what they just announced. The Bank of America program was for their Countrywide customers, if your house value had decline but your mortgage payments were still up to 30% above then their is a program that may forgive a certain part of that debt to bring the loan back down to value of the home currently. I guess in hopes to forgoe forclosure or short sale in the future. I believe you don’t have to have missed any mortgage payments, or may have to miss 2. When I go on the website for them it sounds like you can be up to date but then they make you miss 2 before it starts so I am not sure.

  66. R.Randall Says:

    I have been in a forbearance situation with WaMu (now CHASE)for approx 12 months this month.Approx 2 wks ago I received the pre-Modification Loan Packet.After reviewing it,I saw that the monthly payment was only approx $80.00 less than the original pmt.Also, the mortgage is in my name only and I am responsible for the payment of the loan. My husband & I own a small (us two)business which has been affected by the economic downfall, along with my missing work because my husband was in a wreck and I had to care for him.All this was written in Hardship Letter.ALso I could not make the 1st pre-Mod pmt by April 1st because the packet was not received earlier & I had already paid the bills & forbearance payment, etc. I called CHASE & was instructed to return unsigned the pre-Mod Packet & make another forbearance pmt, which I did. TOday when I called, I was told my Negotiator had my letter & packet & was deciding what to do, consider lowering my pmt, or whatever. I called HUD & they called CHASE with me & they told me that if I did not request my husb’s income be included, it shouldn’t since his income is used to pay the rent and expenses for our business, which has operated at a loss for the past 2 yrs. I assured CHASE in my letter that I can make the payment if it is based upon MY gross income at 31%. I receive 1,275.00 from SS monthly & 1,800. from my 1/2 income from the business. If his 1/2 income is included then I would be receiving 100% of the business income and he could not maintain the business, then I could not be paid the $1,800. a mth. My Mortgage is $1,550. and they offered $1,475.40 for the pre-Mod, though Escrow is included, we live month to month so in the short term, the difference would really not make the home more affordable, & thus I requested they reconsider lowering it to MY gross monthly income. What do you think might happen? I am really scared. I had a perfect payment record prior to the economic downfall & the wreck. Thank you.

    Todd Reply:

    Thanks for asking. I honestly don’t know what will happen. Normally, you’re supposed to report total household income. But each bank also has tremendous flexibility to consider whatever they want to and make any adjustments that they and the investors agree to.

    It sounds like they want to work with you and aren’t looking to foreclose. And if your business downturn is short-term in nature, I think you has a fair shot at getting a more affordable mod payment. If they determine your income is not dependable enough, you probably don’t have a very good shot.

    I’m sorry I can’t give any firmer answers than this, but it’s completely up to Chase at this point and trying to second guess them is like trying to second guess the weather unfortunately.

  67. poordouglas Says:

    I have been dealing/combating with indymac for about 18 months and am questioning the wisdom of it. I have a lawyer who wants to litigate because indymac/onewest has violated several laws. I doubt both him and the financial feasibility of a lawsuit. I am trying to look at my situation unemotionally since emotion and faith in others got me in this mess. The facts are : 1. A first mortgage of $223,000 and a HELOC of $67,000 on my home worth $185,000. 2. Recently filed chapter 7 bankruptcy in which first and HELOC were listed 3. Present income $2,200 month 4. Home needs $10,000 in repairs 5.I am 60 years of age.
    Wouldn’t the prudent course be to let the foreclosure proceed wiping out the debt forever and having no tax consequence due to the foreclosure tax amnesty running through 2012 ? If I did qualify for HAMP, will the value of my home recover to the loan amounts in my lifetime or will I be delaying a situation and not have the cover of bankruptcy and tax amnesty ?

    Todd Reply:

    Honestly, my guess is no better than anyone else’s. I don’t know your market or your life situation outside of what you’ve described.

    I think it’s definitely possible for your home price to recover in the next 20 years or so. But my question would be do you really want this stress in your life? If your income is fixed at $2,200, your mortgage is probably taking up almost all of that, isn’t it?

    When my wife and I had to decide whether to drain our savings to try to keep a rental house (see My Short Sale for more info), we decided not to. The money would’ve run out before the short sale completed anyway we figured. We decided it was better for our family stress level to stop paying the mortgage payments, work the short sale, and let the home foreclose if the bank pursued it. Either way, our credit was going to be toast, but at least this way we still had some money in the bank. We eventually sold the home for about $55,000 less than we owed and the bank wrote off the loss.

    In your case, I’d recommend trying to sell like we did. It might gain you significantly more time in the home and you’ll no worse off if they do eventually foreclose. In the mean time, save every penny you can toward moving costs and securing a rental place.

    If you’re not comfortable with the law suit idea, maybe you could get a second opinion?

    In the end, though, you should do whatever gives you and your family peace of mind. It’s hard to choose not to pay a bill when you’ve had that habit all your life. But if that’s what it takes to allow you to move on with your life, then do it.

    Best of luck,

  68. Diana Says:

    Dear Tood,

    We applied for loan modification again(HSBC denied us the 1st time).
    This time HSBC sent a letter to denied us again and I call HSBC to find out the why. They said the information is not correct and that they are sending out a forbearance agreement to us. The Agreement is for 3 month
    and after that HSBC gonna review our situation again to see what kind of package they can offer us. Is the forbearance agreement the trial before the loan modification? Please advice. Thanks!


    Todd Reply:

    No, the 3 month forbearance is not part of the trial period or the loan modification. It is completely separate.

  69. Jane Stewart Says:

    Dear Todd,
    We got behind on our mortgage and was sent notice of default in Nov 09 and still couldn’t pay. Three months later (Feb 10), we received foreclosure notice with an auction sale date of March 10. We immediately contacted our lender to inquire about any possible programs to help us keep our home, for we intended to stay at our house. They put us on trial period (April-June) lowering our mortgage payment by almost $500.and sent us the package for HAMP program. We returned all documents needed and kept current on payment during the trial period. Two weeks ago, our house was foreclosed on was put on sale and got sold to a third party without our knowledge. (I was afraid because I stopped making payments after the trial period, they did not tell me to continue making payments after the trial period for it was my understanding we will find out how much we will need to pay after the trial period once the loan was approved.). I was waiting for their decision on our HAMP application)I asked our lender why they sold our house. What happened to our HAMP application. They said in July 7th they mailed us a denial letter saying they could not offer the HAMP program to us because we did not provide them with the documents they requested. I asked the missing documents were? I followed up in May asking them if they received all my documents okay and if there were any additional documents they need from us, and I was advised at that time that they received all document and no additional docs needed. So I was surprised that they denied our application due to that. Then the lender said, well it’s not really about missing documents it’s about your Income Tax Return not being signed. What??? I don’t remember seeing it on my list and even so we signed an authorization for them to obtain our tax records from IRS. We finally saw the denial letter (I admit it was our fault not seeing/reading it on time.), the letter was very confusing. We thought we have 30 days to contact the lender but then they sold our home 28 days after the date of the notice of denial.
    It read:
    We had to file bankruptcy to stay in our home to give us some time to think about all of this. The new owner had already given us a 3-day notice the day after it was sold. We are thinking of pursuing a case against the lender. We filed a dispute last week (we were advised by the lender’s foreclosure dept to do so).
    What do you think about our case, is this happening everywhere? Is our lender at fault or are we?

    Thank you,

    Todd Reply:

    The bottom line is that once the home is sold, it’s extremely difficult to get it back in most states. Unless you can prove fraud or some other legal basis to throw the foreclosure action out, you’re normally out of luck. Some states allow for a “Redemption Period” where you can buy the house back, but it doesn’t sound like that’s an option for you anyway.

    In the notice above, it says that if there was a foreclosure action pending that it could re-start right where it left off and that’s what I’d say happened. I could be wrong, but since you had less than 30 days from the notice to the foreclosure sale, that’s probably it.

    If you’d like to pursue legal options, I’d recommend checking out the National Association of Consumer Advocates. They have a nationwide network of attorneys that can help you with little or no cost in many cases. You can search for an attorney here.

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