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Thursday, September 02nd, 2010
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Comment by Cliff Capdevielle on 26 August 2009:
I am an attorney in California helping consumers with Bankruptcy and Loan Modification issues. I want to get the word out about some problems I am seeing with the loan modification applications.
Contrary to the recent news, banks are offering loan modifications. However many of the applications are not accepted for these reasons:
1. The application is incomplete. In contrast to the past, banks require perfect documentation. For example, if a person is self employed they will be required to provide a current year to date P&L. Bank statements and Payroll records must be current(past 60 days). Oftentimes the banks won’t review a file without current information even though they are only reviewing the file 90 days after it is submitted. Customers should continue to submit bank and payroll records to the bank until the application process is complete. The banks will not remind clients or call them to let them know their applications are incomplete or their information is outdated.
2. Parts of the file is lost by the bank or servicer. Banks and servicers are receiving thousands of applications per day(most by fax). When submitting an application to the bank, homeowners should write the loan number on each and every documents, so that the banks can put the documents in the correct file. Servicers have available to attorneys methods of submitting applications through web portals. These are not currently available to homeowners.
3. Homeowners are not using the bank’s forms. Most banks now have websites with preprinted forms to use for the application. If homeowners use other forms for hardship letters or financial statements, the reviewer may not recognize it as such, and deny the application without review.
4. Homeowners are trying to make themselves look as impoverished as possible to qualify. The goal of a homeowner should be to explain to the bank why they can not make the current payment. If the homeowner exaggerates expenses or underreports income, he or she may make themselves ineligible for a modification, when they might otherwise be eligible.
5. Homeowners are giving up. The banks are expanding their programs weekly. Even if a home owner was denied an application last year or even last month, they may be eligible for a program now. It doesn’t hurt to resubmit an application with updated information.
Please call or email me with any questions.
Comment by Laura Moya on 19 September 2009:
HI, I have an fha 30 yr. fixed @7.25%, I have lost income. My mortgage is with us bank and every time I speak with them on what my options are to modify they always respond in such a way as I feel I have to get my secret decoder ring out or dust off the crystal ball to get information! The fha website is not very informative either! I know that as of aug. 15,2009 things changed for fha and us bank told me they modify now, fha with there own guidelines not the obama plan, I NEED HELP, its obvious that no one can traverse these shark infested waters without professional help! So can you inform me what is the new fha work outs now, before us bank would not even work out anything, they like that intrest too much, lets be real! Thank-You
Comment by Liz Freeman on 22 September 2009:
Talk to another lender about doing an FHA streamline mortgage. If you do it before January 1, you will probably not have to get an appraisal or verify your income, and if your credit has dropped it won’t matter as long as you have been paying your mortgage. There is also an FHA modification plan called FHA-HAMP. That would have to be done through your current lender. Here is the scoop on FHA Home Affordable Modification Plan. http://makinghomeaffordable.gov/pr_07302009.html
Comment by sue mitchel on 7 October 2009:
After reading the article on FHA,I was hopeful as I am looking at a foreclose that needs work. I can understand the gov now opening up the loans for investors in this market. But as a first time buyer, and even just a regular person who lives in Nevada where the speculation fanned the wild fires until all was cooked, as it did in many other places, I am not very fond of the “investors” and the mentality that help drive prices far beyond the reach of average American incomes. And the sky is now falling back in touch with the earth where the average Joe can pick a house, now out of the huge glut that was created by the mortgage interests and even the Realtor. So I guess what goes up must come down.
Comment by Peter G. Miller on 7 October 2009:
You make several good points.
There would be a difference in the sense that to be an FHA investor you would need a fully documented loan, a complete appraisal and a real down payment. As well your loan payment would not balloon in a few years and there would be no prepayment penalty.
Comment by Mary Burak on 7 October 2009:
I read your article regarding investor’s and the FHA 203k loan. I fully understand and agree with you, but with one huge exception, which is the FHA-90 Day Title Seasoning Rule. This rule has to be eliminated in it’s entirity before the real estate industry can fully function and get back on track. No investor, who fixes and flips houses can afford to sell to an FHA buyer after holding the house for 90 days, paying repair costs, insurance and taxes and possibly closing in 45 days, making the holding time approximately 5 months. I have been in communication with Commissioner Stevens, the head of FHA/HUD, who says that he is looking at the rule. If you would like a copy of my letter to Mr. Stevens, I would be happy to forward a copy to you. It seems to me that FHA is shooting themselves in the foot all the way around.