proven 15 STEPS to A LOAN MODIFICATION
(For additional help, please fill in the form below.)
After reading this page, go to Calculate Your Mortgage.
Unemployment benefits. Are they now allowed? (as of 2/10/11) Wells Fargo CEO area has reported that "for the most part" unemployment is not allowed. "A very few investors" now allow unemployment.
Recommendation: Before answering any income verification questions, try to find out first if unemployment is allowed. Assume NO when preparing your numbers for modification. Note: In the 2 modification lessons (Making Home Affordable and Traditional), read "12 ways to show income" to learn ways to augment income for modification purposes.See Updates. See Top Tips.
Click PLAY once to listen to entire lesson. Video sections will play automatically in sequence.
To replay a video, click on the lower LEFT BOX to bring up play list and click on the desired video.
***** This video lesson explains material presented below. *****
Prepare your Numbers First Before Calling Your Servicer
Click here to learn: Formulas and Outcomes Per Loan Type.
NOTES BEFORE YOU BEGIN:
** Some Conventional (investor-owned) loans follow the formulas of the Making Home Affordable
program (HAMP). Ask your Servicer first if your Investor is following Making Home Affordable formulas
for eligibility and if so, click here. If you are not eligible for Making Home Affordable guidelines, attempt
to posture your numbers to meet the formulas below. Outcomes can vary widely with Conventional
** V.A. Loans now follow VA HAMP formulas (if Servicer is utilizing) as well as the Traditional formulas.
Always ask the Servicer first if the Investor is following the V A HAMP or just Traditional formulas.
The following lesson gives Traditional formulas. SEE STEP #4 below for formulas.
For the lesson on VA HAMP, click here
** All Loans: Servicers will consider Borrowers for a modification using the traditional formula;
(See Step 4 below).
Other Resources: Information You Need: Frequently Asked Questions (*recommended).
Reasons Denials Occur. Cover this checklist.
Do Not Panic. Know the difference between letters
STEP #1: If you are reading this lesson, to be aware of all of your options, ask your Servicer if your case is being evaluated based on Making Home Affordable (HAMP formulas) or just Traditional guidelines. Remember if you are not eligible for HAMP, try Traditional guidelines are discussed below. To learn about the Traditional formula, read STEP 4 below. To learn about types of loans, eligibility and outcomes, click here. To access the Making Home Affordable lesson, click here.
STEP #2: Circumstances may require that you need to authorize someone to speak to your Mortgage Servicer --either with you or on your behalf. A Letter of Authorization simply authorizes a third party, such as a Friend, Counselor, or Realtor (if selling property) to speak to your Mortgage Servicer. To obtain a Letter of Authorization click here. Use one for each Servicer. Fill in the name of the authorized person(s) and then your personal information. Fax this form - without a fax cover - to the Letter of Authorization fax number listed in the first column under Important Numbers 1st Chart Loss Mitigation Allow 72 hours for it to be uploaded by the Mortgage Servicer. It is becoming increasingly difficult with some servicers for third parties to help Borrowers without a Letter of Authorization already on file. If you need another party to help you, please fax this authorization immediately and confirm with the Servicer that is it has been received to avoid complications later.
If you have filed bankruptcy and you are still under jurisdiction of the court, you can review loan workout options with your Servicer, if a Consent Form from the Bankruptcy attorney is faxed directly into the Servicer’s bankruptcy area. To obtain a sample Consent Form click here. Send this form to your bankruptcy attorney to prepare and ask your attorney to fax it in to the Servicer’s Bankruptcy Department. Find the fax number under Important Numbers 3rd Chart Bankruptcy Numbers or ask the Servicer’s Bankruptcy area for the fax number.
STEP #3: PREPARE your numbers before contacting your servicer to make sure that you fit the guidelines. If you have previously verbally answered the questions incorrectly, do not worry. Prepare and begin again. Contrary to what you may be told, you do not have to call the Servicer first before faxing your information. The Servicer will accept the paperwork via fax. They will mostly likely ask for your financial information when you call to verify receipt of documentation. We have provided scripts to use when calling your Servicer in Step 14 on the website.
STEP #4: To meet best practices Traditional guidelines, make sure to show your Net Income (income after deductions) to be approximately $300 (not under $300) over total Monthly Expenses , including your monthly mortgage payment Principal, Interest, Taxes and Insurance, + Revolving Debt (any minimum payment on all installment debts/credit cards, monthly payments on all junior liens/2nd mortgages, monthly mortgage payments for second homes) + household expenses.
** Best practices expressed is based on an average monthly income (spreads may have to be a little greater in higher income brackets). Remember when you are using the Mortgage Calculator, after you add the back amount owed, keep in mind they are looking for affordability, the ability to make the modified monthly payment without risk of default. If the potential modified payment, added to your other expenses, does not show that you can cover all of your expenses, the modification will most likely be denied.
Caution: Ocwen calculates differently - see notes about Ocwen before picture of worksheet below. Traditional modifications are different from HAMP (Making Home Affordable) as they take into account household expenses.
Click here to obtain Operation Restoration's Financial Worksheet for Traditional Guidelines (different from worksheet for Making Home Affordable). This will bring up a blank form and a sample. It is critical that you prepare your answers before you contact your Mortgage Servicer so that you will answer the financial questions correctly to meet Investor guidelines for a traditional modification.
We recommend practicing with Operation Restoration’s financial worksheet. Include this in your package to the Servicer,
- or -
Your Servicer may require their own financial worksheet. If you see your Servicer here, click on the Servicer's name to obtain their required financial worksheet. See Chase, EMC, and Washington Mutual (all owned by Chase), Saxon, RBC, American Home Mortgage, Indymac and One West (Indymac was sold to One West), Ocwen,
Capital One (Capital One includes Financial Worksheet and Hardship Affidavit). Sign and date it.
Note: Ocwen worksheet is different. We are asking upper levels of Ocwen for their new formulas.
1. Make sure you show Net Income (not Gross income, income before deductions) to be more than total Monthly Expenses by approximately $300.00. If your income shows considerably more than that, for example $800 more, then the Servicer may attempt to place you on a repayment plan to collect the monthly mortgage payment plus a portion of the past-due amount.
2. Do not include unemployment income (see note at top of page) as this is considered temporary income.
» If a co-borrower has income, show the co-borrower’s income.
» You can also add other income contributing to household. See Ways to Show Income below.
» If you include unemployment income in your calculations, most likely you will be contacted by representatives from the Servicer's Collection or Foreclosure area, and most likely you will be offered a Repayment plan. Repayment plans are explained here in Information You Need: Frequently Asked Questions about Prevention Options and Loan Modifications. Always ask, if you receive a call from the Servicer, to what department you are speaking. The Foreclosure/Collections area is designed to collect money and to set up Repayment plans (which is usually not a feasible alternative).
3. Show Income for the most recent one (1) month/30 day period. This does not apply to people using Profit and Loss sheets who are reporting average gross and net monthly incomes. Profit and Loss sheets are covered in Ways to Show Income below.
4. If your monthly expenses (including the mortgage(s) are more than eligible net income, consider:
• Lowering expenses such as Food; or, lowering or omitting expenses such as Clothes, Dues or other expenses not reported on a Credit Report.
• Adding income of another person living in house.
• Getting a renter
• Asking member of family to contribute to monthly household income.
• Getting a part-time job, even working from home.
• Getting another job, following a structured job search campaign. We will soon be presenting Proven 15 Steps to Obtaining a Job: How to Run a Successful Job Search Campaign.
Important Tips about preparing your numbers for the Financial Worksheet (refers to Operation Restoration’s financial statement):
1. Include property taxes and homeowner's insurance in the right expense column of the financial statement only if they are not included in the mortgage payment. Pro-rate them into monthly amounts. Do not show taxes and insurance if they are included in the mortgage; instead, write "included" in the available space.
2. Present all expenses in terms of monthly amounts, even if you are billed every 6 months, 3 months, etc. For example, if you pay your auto insurance every 6 months, divide the amount by 6 and give the result next to "auto insurance".
3. Do not double count expenses. If a loan or other amount is deducted from your Gross income, do not place it under Expenses.
4. If you are self-employed and using a profit and loss sheet, deduct business expenses from Gross Income. Do not put business expenses under Expenses on the financial worksheet. The financial worksheet is for personal expenses.
5. If you are not paying on your credit cards or other loans, place monthly minimum amount(s) due anyway – they are used in the calculations to determine if you meet Investor guidelines. Remember, Mortgage servicers pull credit reports to verify numbers you report on the Worksheet. (If you have filed bankruptcy which has eliminated credit card debt, then put 0 next to credit cards). If you are unsure about your minimum payments, call your credit card company or ask for a free credit report from a credit bureau such as Equifax.
6. If you have other Loans, such as other mortgages, place these amounts in empty or unused spaces on the Financial Worksheet and mark “Loan 1, Loan 2, etc”. Report rental income in the “Other Income” box on the Worksheet. (Please note: Servicers only count 75% of rental income as income.)
7. Bankruptcy clients: place your Trustee amount in the expense column if the amount is not automatically taken out of your pay every month.
8. If you receive food stamps and this covers food expenses, write "Food Stamps" next to Food and put "0" for monthly food expenses.
Reporting Assets and Income:
1. List estimated value of all autos even if you do not have auto loans.
2. List a realistic, conservative value for your property. Do not use the property tax assessment and do not list the mortgage balance unless this is substantiated by a professional. The following recommendation is not mandatory but is meant to help you be aware of your current market value. You may want to ask 1-2 Realtors who work in your area to give you a “CMA 1 page Summary”. This is free and will take a Realtor just a couple of minutes. If later you decide to sell your property, this Realtor may be the one you ask to sell it. If you do get the help of a Realtor, ask them not to pull records older than 6 months and to use properties similar to yours (not extreme variations). Mortgage Servicers do run internal valuations so it is better for you to be knowledgeable.
3. For income, do not estimate Gross and Net Income amounts! These amounts have to be exact and verified by documentation.
4. Remember, do not use unemployment income (see note at top of page).
5. If you have other income (listed in the Additional Other Income box), please circle all income types that apply.
Ways to Show Income
To avoid confusion use one (1) method per Income. (In other words, do not show the same income via a pay stub and by circling direct deposits on bank statements). Always show the most recent one (1) month/30 day period. Please note: this does not apply to people using Profit and Loss sheets who are reporting Average monthly gross and net incomes. Profit and Loss sheets are explained below.
Recommendation: Write on documents you are using to verify income: "Use As Income Verification". This will help the Servicer’s employee to quickly identify what you are using as supporting documents.
These are 12 ways to verify income listed here:
1. Pay stubs from full-time or part-time employment (most common request from Servicers). Remember to show the most recent 30 days or 1 month period. As paystubs are sometimes hard to read, we recommend that you circle Pay Dates, Gross Income and Net income. (Gross Income is BEFORE any deductions. Net income is AFTER all deductions).
» Write Gross and Net Income numbers CLEARLY somewhere on the stubs.
» Write somewhere on paystub: "PAID TWICE A MONTH" or "PAID EVERY TWO
WEEKS" or "PAID ONCE A WEEK". Click here for an example.
2. Profit and Loss Sheet. Click on the desired format here to obtain a template: Template in Excel Template in PDF. Use the Profit and Loss Sheet If you are self-employed or if your income fluctuates considerably month to month and you want the servicer to use average income. (Make sure to explain this fluctuation in your hardship letter). If you are self employed, take total Gross and Net income during the self-employed time period (use at least 6 months and 12 months if you can) and divide by the number of months to get an average monthly amount for Gross and Net Income. One word of caution: Many investors serviced by Bank of America may require a Profit and Loss sheet signed by a CPA, but if you develop your own and afterwards are asked to provide one by a CPA, you can then meet that requirement at that time.
NOTE: If you show that your NET INCOME is what you receive AFTER business expenses (suggestion: leave out income taxes in profit and loss sheet), Servicers will most often consider NET INCOME from your Profit and Loss Sheet as GROSS INCOME and then they will divide this GROSS INCOME by 1.25 to get NET INCOME (figuring taxes). Present the Profit and Loss Sheet with your numbers but remember to present your Gross Income and Net Income numbers on the Worksheet based on the way the Servicers are calculating Gross and Net explained above.
3. Direct deposits. Use the page or pages from the most recent bank statement and circle the deposits. Click here for an example. Use this way only as an alternative if you do not have pay stubs. Remember to write “Use as Income Verification” somewhere on the page. This does not replace the requirement to submit full bank statements. This is only to verify income.
4. Pension/Benefits Statement showing the monthly pay to you or a contributing member to household. Click here for example pension statements. To obtain one: Call the number listed on any correspondence from the benefits provider and request a copy of the statement. The benefits provider is also listed on checks. Some providers will fax letters and others will mail them.
5. Social Security Rewards Letter showing the monthly pay to you or a contributing member to household. Click here for example social security letters. To obtain: Go to the local Social Security office and give your id for immediate response or call 1-800-772-1213 and request the rewards letter. They will mail a statement at your request.
6. Disability benefits statement showing the monthly pay to you or a contributing member to household. Click here for an example V.A. Disability letter. To obtain a V.A. Disability letter: Go to the local V.A. Administrative office or call 1-800-827-1000 , press 0, and give your social security number or military I.D. They will fax and mail a statement at your request.
7. Child support agreement. If you receive court ordered child support, you will be required to provide the court document or agreement.
8. Alimony agreement. If you receive alimony, you will be required to provide a document verifying alimony, such as a divorce settlement.
9. DFACS agreement. If you receive income from DFACS for a dependent, then a document verifying this fact will be required.
10. Rental Agreement. Click on the desired format here to obtain a template: Template in Word Template in PDF. Use a rental agreement if you rent a room or property to another party. Please note: Some Servicers -- such as Saxon -- require a rental agreement, even from a family member.living or contributing to household. Most of the time, however, income verification from a contributing household member will suffice. You can either ask the Servicer up front or provide documentation and learn it later when you ask (per our scripts) if there is any documentation missing.
11. A notarized Letter from another person contributing to household. If you use this method, proof of income (most recent 1 month) from the person contributing to household is also required. Click here for examples: Example in Word. Example in PDF.
12: Unemployment benefits letter (that shows you will be receiving at least 9 months of unemployment). Note: As of 2/10/11, Wells Fargo executive area reports that "very few investors" accept unemployment now. See notes at the top of the page.
1. If you are using several income sources or several deposits during the most recent month, it is best to use an income summary. Click here for examples: Example in Word. Example in PDF. All borrowers are to sign, print, and date this page.
2. Cash received for services must be verified! Before spending cash, deposit cash immediately into a bank account so that deposits may be verified from bank statements. Then withdraw the amount needed.
If you do not qualify for this plan right now, you have 4 options:
1. Ask for a Partial Payment Forebearance. Click here for an example. This is a temporary solution which is generally offered for temporary financial losses associated with illness (which resulted in time off work and medical bills), death in the family (resulting in time off work and funeral expenses), and temporary cut in pay (necessitating a mandatory leave of absence for instance). Depending on the Servicer, the Borrower may be able to use reduction in income or loss of income, but that varies by Servicer. A Partial Payment forebearance allows lower payments (sometimes one-half the current payment) for a limited time but Borrower must meet the guidelines of -- and request -- a Loan Modification at the end of the Forebearance period.
2. If you are not at immediate risk of foreclosure, you may be able to wait until you are able to meet the guidelines and then apply. Also remember guidelines can change. Wait 30 days and ask the same question : Is the Investor evaluating under the Making Home Affordable program or under conventional guidelines? Look under the subject Do Not Panic on the website for samples of letters from Servicers and foreclosure attorneys so that you will understand the differences. Also know the laws in your state regarding notice of foreclosure.
3. Sell your home. You can sell if the value is under the Mortgage balance. Please consult the lesson by clicking: Proven 15 Steps to Short Sale: Selling Your Property Under the Mortgage Balance.
4. If you are at immediate risk of (a few days from) foreclosure and just need to stall it to get prepared, you can file bankruptcy. Please consult the website for more details. Bankruptcy is considered more minor than foreclosure. You can recover from Bankruptcy more easily than Foreclosure. Produce the Note is less dependable but is another option to try.
If the answer is YES: You most likely will receive a “Loan Modification” or an initial trial agreement.
If the answer is NO: Do you require Job Assistance, including resume writing and Job Counseling?
If YES: Please consult the page entitled Job Assistance. As of this writing, Operation Restoration is in the process of developing Proven 15 Steps to Obtaining a Job: How to Run a Successful Job Search Campaign. Please check the website soon for this information.
Borrowers: Have you decided to sell your house or do you have questions about the documentation and process of selling (even if it is valued under the mortgage balance)?
IF YES: consult the page on the website entitled Sale of Property (video being prepared) for Proven 15 Steps to Short Sale: Selling Property Below the Mortgage Balance.
STEP #6: Prepare a letter explaining your hardship. We have provided samples on the website with a suggested format. Sample in Word format Sample in PDF format. Write a ONE-page letter following this format and remember to remain brief. Use relevant (current) reasons for hardship. Please note: If letters are over 1 page, pages can get separated, and can cause file delays or closure of your file. Make sure to sign, print, and always currently date your letter.
STEP #7: Your Servicer may require a Hardship Affidavit. If you see your Servicer here, click on the Servicer to get the form: Chase, Washington Mutual, EMC, Ocwen, GMAC,
Indymac and OneWest (Indymac now One West), Capital One. (Capital One also includes Financial Worksheet)
If there is a space provided for a narrative, write "See Hardship Letter Attached".
STEP #8: Collect two (2) months most recent bank statements – ALL accounts, ALL pages. (Note: Wachovia requires 3 months at this time). We recommend that you send literally 2 months of bank statements, not 60 days of transactional detail because they are looking for 2 months. If you do not have paper statements available, you can usually go online, choose "VIEW PAPER STATEMENTS", and retrieve an actual bank statement. If you have a business account and are reporting income as a self-employed person, also send two (2) months most recent business bank statements (only if you have a business account). If the negotiator needs more later, you can send more at that time.
STEP #9: Collect two (2) most recent full tax returns and two (2) most recent two years W-2's or 1099's. If you have not filed your tax return, an extension you can get here will suffice. Warning: Make sure you sign and date tax returns before sending, even if they are a copy. Failure to do so could result in a denial, or your file not being worked.
Note: The required number of tax returns (one or two most recent years) varies. Be prepared to send most recent two years, especially if you are self-employed or providing rental agreements.
STEP #10: Make a copy of a recent utility bill. This will serve to prove occupancy.
STEP #10a: NEW! Get new Dodd-Frank Certification here. Fill it in and include with your other documents.
STEP #11: Fill out the IRS tax form 4506T. Get 4506-T form. This form allows the Servicer to pull tax records to verify information you present to them. Fill this form out per our instructions on the website. Please make sure to sign and date the form. An incomplete form can result in the Servicer not working your file.
Follow these instructions to fill out the form:
1b. Give social security number.
2 a and b. Give 2nd person's Name and Social Security number (if applicable).
3. Print your current name(s) and complete address
4. Print previous address shown on tax return if different from #3.
6. Your most likely answer will be "1040".
6a. You will most like cross this box and not "b" or "c".
7. Cross this box ONLY IF you did not file last year.
9. Fill in 12/31/2009 and 12/31/2008 in areas provided (or 2 years most recently filed)
Sign, date, and give telephone number.
STEP #12: Do you want us to check your Financial Worksheet before you send it to the Servicer?
» If the answer is YES: fax your Financial Worksheet to the number listed under Contact Us. We will email you the suggestions, or call you directly. Please do not send other documents to Operation Restoration.
» Before you fax your documents, if you want us to verbally review the package’s contents, please call or email some alternative times. Make sure you have your fax cover sheet filled out and supporting documents behind it.
» Remember, write loan numbers on ALL documents and pages before you send them to your Mortgage Servicer.
STEP #13: Make sure you do not have any hinderances with your Servicer.
This is extremely important: If you have previously given your Servicer information about yourself or household, and it was incorrect, OR you want to ensure your Servicer is making a decision based on correct material,
» Call your Servicer to CLOSE OUT / BACK OUT any previous information. Otherwise your new material may not be uploaded correctly or may not be uploaded at all.
Note: If you have signed a contract with an organization, please know that they cannot do anything beyond what you can do yourself. Sometimes third parties can actually hinder your progress. We recommend telling your Servicer that you want to proceed yourself.
|EXTRA documents to include in your package (if applicable): |
• Homeowner's Association bill or proof of payment
• Rental agreement (see above under Ways to Show Income)
• Profit and Loss sheet (for borrowers who are self-employed or who variations in
income). See Ways to Show Income.
• For school loans that have been deferred: proof of deferment. (Sometimes credit
reports do not indicate deferment and documentation is necessary for proof.)
STEP #14: Write loan numbers on all pages and fax your work to the Servicer after you have checked it thoroughly for accuracy and completeness. You are welcome to use the fax cover provided on the website. This may start a community effort to work together to help each other. There are fax covers for Loss Mitigation regular, Loss Mitigation if you are in bankruptcy, and Loss Mitigation if you are in Imminent Default, meaning you are at risk of defaulting on your loan. If you are in Imminent Default, ask you Servicer if there is a separate area handling Imminent Default cases and ask if there are different phone and fax numbers to use.
Prepare to fax:
» Print out the appropriate fax cover sheet, fill in your personal information at the top, and Mortgage Servicer name, fax number, and phone number.
» Use one fax cover per Loan.
» If your Mortgage Servicer is handling both of your loans, remember they are treated separately. Know the loan types for both loans and Fax paperwork for each loan separately.
» Follow the check list on the cover sheet and place everything in order. Change your cover sheet, as needed to reflect your personal items, for example - income from 2 sources, or a profit and loss sheet.
» Click here for Important Numbers. Look under the appropriate chart for your Servicer's phone and fax numbers. Numbers are always being added or changed according to what we learn. We always recommend that you call the number found in the third column and verify the numbers before sending documents
» Do not send the hardship documents to the Fax number for Letters of Authorization. Instead fax documentation to the number located under the 2nd column next to the name of of your Servicer. We recommend that you call the Servicer first and verify the number before sending. Servicers’ phone numbers are listed in column 3.
CRITICAL!: Record the following information and save it with your financial worksheet for follow up calls to your Servicer: Date and Time fax was sent in, fax number faxed FROM and fax number you faxed TO.
FAX COVER for LOSS MITIGATION Click on one: Word format PDF format
Note: Use this cover if you are behind in your payments. See fax numbers here: Important Numbers. Customize fax cover as needed.
FAX COVER for BANKRUPTCY Click on one: Word format PDF format
Note: Use this cover if you have been in Bankruptcy and your case is still considered in Bankruptcy by the Servicer. See fax numbers here: Important Numbers.
Customize fax cover as needed.
FAX COVER for IMMINENT DEFAULT Click on one: Word format PDF format
Note: Use this cover if you are risk of default. Some Servicers are providing modifications to Borrowers who are not late yet but are at risk of default, i.e. they have had a drop in pay and have run out of savings to cover expenses relating to hardship. Call to learn the Imminent Default fax number and follow up phone number for Imminent Default Loan Modifications. Customize fax cover.
STEP #15: Here are the scripts to use when following up with your Servicer. Remember, if you are not paying your mortgage, you will continue to receive calls from the Collections area. If you do speak with them, please tell them to notate that you are under review for a loan modification. They are trained (and are measured) to attempt to collect money from you. This will not stop the calls as this is an automated function with all Servicers. It is your choice whether or not to make a payment during the period of loan modification review (making payments will help you from being further behind). Please note: it is recommended that you do not spend money on other items as you may be asked what funds you have available upon loan modification agreement.
Always ask, if you receive a call from the Servicer, to what department you are speaking. The Foreclosure/Collections area is designed to collect money and to set up Repayment plans and they do not normally communicate with the Loss Mitigation or Short Sale areas.
Use these scripts closely as there is a reason for the wording. You do not have to say anything else. Because of backlogs, the entire process from beginning to end may take several months. Remember to remain calm and patient.
SCRIPT TO DETERMINE PAPERWORK WAS RECEIVED - Call every day until documents are confirmed received.
» Note: Use this script 72 hours after faxing (to give Servicer time to upload).
» Starting 72 hours after faxing, call every day until documents are received. If documents have not been received within one week, check the loss mitigation number with the Servicer and fax again.
IMPORTANT: Your Servicer may ask you to read your financials when you call in. Be prepared! Have your financial worksheet available when you call and make sure you stay on the phone until they have recorded everything correctly. Don't rush, even if you have to review 2-3 times.
YOU: "A request for loan modification and all documents were faxed on _______, at
______ time. I am calling to see if they were received.
(If yes): Are there any documents missing? Note: ask this every time as
documents do get lost or additional verification may be needed.
(Make sure the Servicer checks the system).
Is there a status on my account?
(If no): If I give you the fax information, will you be able to find the documents?
(If yes): give the date and time of the fax, and fax numbers to and from
(If no): I will call back. Thank you."
SCRIPT TO USE AFTER PAPERWORK IS RECEIVED - Call once a week until Negotiator is assigned..
IMPORTANT: Re-verify your financials with your Servicer each time you call in.
(Always make sure the Servicer's system reflects the numbers you reported so that your case will be analyzed based on correct information). Be prepared! Have your financial worksheet available when you call.
YOU: "A request for loan modification and all documents were faxed on ______, at
______ time. They were received ________ date (give date you learned).
Are there any documents missing? Note: ask this every time as documents do
get lost or additional verification may be needed. (Make sure the Servicer
checks the system).
I am calling to check status.
Is there a negotiator assigned?"
(If yes): May I have the name, phone number and email address of negotiator?
Note: if they do not give this out:
» Ask if you can have the name, and
» Ask if you can be transferred to the negotiator (BEST) or if they can
email the negotiator to call you.
SURVIVALTIP: If you believe you have a foreclosure date in the system, ASK them to look it up. If you do, do not panic. When your documents are sent to the Servicer, they will continue to push the foreclosure date FORWARD in their system to give themselves time to work the file, or they will take the date OUT. Make sure to call the Servicer, starting three (3) days before the foreclosure date, to verify that the foreclosure date has been moved or stopped. CRITICAL: THEN call the ATTORNEY and make sure the attorney has been notified.
SCRIPT TO USE AFTER A NEGOTIATOR HAS BEEN ASSIGNED. Call once a week until you receive an agreement.
Note: Call the Negotiator if you have his/her name and direct contact information. Otherwise, call the Loss Mitigation area.
YOU: "A request for loan modification and all documents were faxed on ______, at
______ time. They were received ________ date (give date you learned).
I am calling to check status.
Are there any documents missing?" Note: ask this every time as documents do
get lost or additional verification may be needed. (Make sure the Servicer
checks the system).
Optional but appreciated:
Please report outcome to Operation Restoration by writing hope@OperationRest.org. If you need additional help, or need Servicer executive level intervention, please contact us immediately.
What are the possible outcomes of a modification request?
These loans are located in investment pools (or funds) that have guaranteed returns. These pools (or funds) have different interest rates. Expect your Servicer to offer a market interest rate and remember the interest rate is determined by Investment pool guidelines.
V. A. Loans. Expect your Servicer to offer a fixed rate for 30 years. The VA HAMP Making Home Affordable program is supposed to follow the U.S. Treasury HAMP but the loans are in investment pools with guarantees. This is being clarified with the V.A. as to Servicer implementation.
Conventional loans. (This is the area of most variation). Some investment pool guidelines follow the formulas of HAMP – in other words, the Servicer (following the investor guidelines) will attempt to bring the mortgage payment down to 31% of a Borrower’s Gross income but the interest rate offered to do so may – or may not – go as low as 2% to so. Some investment pool guidelines literally follow the formulas and agreement structure of the Treasury HAMP for Fannie and Freddie loans. However, remember that conventional loans are in pools with guaranteed returns. Market interest rates are commonly offered. It is at the discretion of the investor who owns your loan whether they will allow modifications at all, or allow an offer of 40 years, or allow a deferred principal balance reduction to make the payment more affordable.
1) Modification - See example. This is a permanent restructuring of your loan.
2) Special Forebearance Agreement (Trial) - See example. This is a trial prior to the Servicer giving a permanent Modification. This requires that you follow the payment arrangements throughout the Trial. Then you are expected to REQUEST A MODIFICATION one (1) month prior to the end of the Trial by sending in documentation (according to the steps above).
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- Anne Batte, Executive Director