Unfortunately, obtaining a loan modification is far from a straightforward
process. Putting aside the frustration of actually applying for a loan
modification with banks that don't seem to care about you, the question
of whether you can get a loan modification and what kind of modification
you can get seems to be a mystery. It certainly doesn't help that
when you call that 1-800 number for your bank, you never seem to speak
to the same person twice and every person you speak with tells you a different
story. Whether or not you can get a loan modification shouldn't be
a mystery but because of all the variables in the process, it may as well be.
There are three crucial pieces of information you need to have 1) who is
your loan servicer- that is, who sends you your mortgage statements every
month, 2) who is your investor- that is, who supposedly owns your mortgage,
3) when was your loan was taken out (when did you close on this loan).
The next most important pieces of information, in my view, are 1) what
are the sources of income available to you and what is the total monthly
pre-tax income that is available to you, 2) what are your annual property
and school taxes, insurance costs and any HOA/Condo/Co-op Fees and 3)
how much other debt do you have.
Generally and very broadly speaking, there are six kinds or categories
of loan modifications.
, there are the loan modifications for pre January 1, 2009 loans that are
owned by government-sponsored enterprises (GSE) like Fannie Mae and Freddie
Mac. I would also put FHA Loan Modifications into this category to keep
things simple. These loans almost always tend to be primary mortgages
as opposed to lines of credit or second mortgages. GSE loans are eligible
to be considered for Home Affordable or "Making Home Affordable"
(HAMP) loan modifications if the borrower and the loan meet certain criteria.
GSE loans may also qualify for special internal modifications offered
by each the GSEs. Each of these programs have their own rules which can
be varied and complex.
, there are HAMP loan modifications (including Tier 1 and Tier 2 modifications)
for non GSE enterprises like Chase, Bank of America, Wells Fargo, Citibank,
Select Portfolio Servicing, Ocwen, etc. But this gets tricky because these
companies do not always own the loans they send statements for every month
and although they have agreed to participate in HAMP, the real owner of
your loan may have restrictions in place that prevent you from getting
a HAMP modification. Again, the "rules" for these modifications
are complex because they are often driven by documents referred to as
"Pooling and Servicing Agreements" (PSAs) and there are many
different PSAs as each investor has their own, tailored to different specifications.
, there are private investor modifications or internal modification options
offered by private owners of mortgage loans that may have restrictions
that prevent you from getting a HAMP modification (or where HAMP is not
an option because of the origination date, loan size or some other factor)
but are willing to offer you another option that meets their own rules
, there are loan modifications for loans that were originated after January
1, 2009. Unfortunately, in many cases, especially GSE loans, these options
are far less affordable than HAMP modifications and in my experience,
this is primarily due to two reasons: 1) the interest rate offered is
usually higher and based on current rates and 2) since these loans are
fairly new, extending your mortgage that has 25 years left to go, to a
new 30 year mortgage (for example), doesn't make that much of a difference.
, there are modifications of your second mortgage or line of credit. These
are worthy of a blog post of their own but generally speaking, they either
mimic your first mortgage modification or are modified pursuant to a special
investor/owner modification program. Second mortgages and lines of credit
tend to be non-GSE owned- it is unusual for a GSE to be the owner of these loans.
, there are loan modifications that are available as the result of litigation-
e.g. the National Mortgage Settlement or other lawsuits filed by various
state Attorney Generals, for example.
This is just the beginning of the loan modification discussion. There
are quite a few more factors that influence what type of a loan modification
you will ultimately be eligible for such as your income, the costs of
your property taxes and insurance (escrow) and how delinquent you are.
So, there are no "one-fit-all" approaches to loan modifications.
Just because your neighbor, friend, family member or co-worker got a certain
type of loan modification and you have a similar situation does not mean
you will get the same kind of modification.
This does not mean you should be discouraged. This just means that you
should get as pro-active as possible and educate yourself on what kind
of mortgage you have, the costs of living in your town/city, get familiar
with your own pre-tax income and then seek the counsel of an experienced
attorney to see what options are available to you.
Questions or interested in a free consultation about your case? Email Natasha
Meruelo, Esq. at firstname.lastname@example.org or call me at (914) 517-7565. The
first consultation is always free.
Natasha Meruelo, Esq. is located at 445 Hamilton Avenue, Suite 1102, White
Plains, NY 10601.
*Natasha Meruelo, Esq., designated as a Federal Debt Relief Agent by an
Act of Congress and the President of the United States, proudly assists
consumers seeking relief under the US Bankruptcy Code.
Prior results do not guarantee a similar outcome.