Home Loan Modifications Getting Approved?

by admin ~ August 9th, 2010.

Over the last few years, banks have been pretty active in approved home loan modification agreements for distressed homeowners nationally.  When Karol Enferadi finally received a contract for her loan modification, she wrote “rejected” on it in large letters and mailed it back to Wells Fargo.   Under the contract, the 65-year-old’s monthly payments would have been reduced for several years, but then eventually her payments would have jumped higher than her current monthly payment and she did not foresee her income increasing accordingly.

Many homeowners say they have been struggling with getting their mortgage restructured through the federal government’s Home Affordable Modification Program since it began in April 2009. Banks have been swamped with an influx of applications and have been struggling to adapt to new federal standards, said Joe Ohayon, senior vice president of community relations for Wells Fargo Home Mortgage.   “It really transformed how home-loan servicers review applications,” Ohayon said. “It was not such a simple change for the mortgage industry. Just the volume of customers in distress was something the industry had to adjust to. I think that led to some issues.”

Home Loan Modifications Reducing Monthly Payments

Banks like Wells Fargo have responded by ramping up staffing to accommodate the volume of loan modification applications and adapting new technology to minimize multiple requests for documents. And in response to complaints from customers who said they were getting bounced between departments, Wells Fargo also started a one-on-one program in which one agent is assigned to a case so homeowners have one point of contact   Ohayon said the industry is continuing to adapt to HAMP standards and homeowners seeking a mortgage loan modification should be persistent and patient, and should not hesitate to contact their servicer.

More than 1.2 million homeowners have entered a trial modification through the HAMP program, according to a July report from the U.S. Treasury Department and the U.S. Department of Housing and Urban Development. See related story on loan-modification program.   In June, about 166,000 homeowners were still in limbo after having waited six or more months in a trial period that was designed to last three months, according to the federal data. Many gave up: More than 91,000 people in trial modifications canceled in June, and of those, 60% had been in trials for more than six months.   Mortgage holders such as Enferadi have learned hard lessons in the process and have advice and warnings to those just starting their application. MarketWatch worked with ProPublica, a nonprofit news organization, to find homeowners participating in HAMP, including Enferadi. See more on ProPublica’s site.   These homeowners said the process of home loan modifications is often time-consuming and frustrating, but staying organized and persistent can help.

Review Finance Contracts Carefully

Enferadi said one of the most important steps she took was to read her contract carefully and consider its long-term consequences. In her case, when Wells Fargo agreed to lower her monthly payments for five years, the bank also had her payments climb above her original $3,000 monthly amount after those five years. She thought it was a bad deal, so she rejected the offer.   “Find out as much as you can,” Enferadi said. “Be persistent. Record names and take notes.”   John Martin, a lawyer in Nevada who helps homeowners with home-loan modifications, said he would have advised Enferadi to avoid signing that contract. He said the HAMP program was designed to lower interest rates, reducing monthly payments for five years and then easing up to the original amount. Article was written by Rebecca L. McClay for MarketWatch.

Category: HAMP, Mortgage News, Published Loan Relief Articles, foreclosure prevention, home loan modification | Tags:

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