Comments on: How many trial modifications become permanent?

By: Penya De Pena

Penya De Pena — Mon, 16 Nov 2009 00:59:22 +0000

Whatever happened to the Hope4Homeowners Home Affordable Refinance program that offered Homeowners immediate relief and eventual equity sharing when property sold or refiances?

By: Brad Maaske

Brad Maaske — Wed, 11 Nov 2009 17:12:00 +0000

Since September of 2008 we have met with over 1,000 people seeking loan modification. We have found that over 50% do not qualify for any program. They either have too much debt, including consumer debt, or have too much income, even though they owe up to 3 x’s the value of their home.

Of the nearly 300 active modifications, over 100 have made more than 5 trial payments now, with no permanent modification yet offered. Some made 4 trial period payments and were then turned down due to the “net present value test”, with their homes set for sale date within one week of the denial.

This system is badly broken and not getting better. Bank of America Home Loans is clearly one of the worst performers in the market, they look like the Titanic right after it hit the iceberg. That ship is going down and there are not enough life rafts. Examples of doing it right include Wachovia and Litton. Wachovia was way ahead of the curve in both short sales resolution and offering common sense work out’s for loan mods. Litton has the best trained staff in the industry and they rarely lose papers or fail to see the entire picture.

By: ft Editorial Staff

ft Editorial Staff — Tue, 10 Nov 2009 20:01:20 +0000

Dorothy:

In most instances, a homeowner’s workout actions have nothing but a negative impact on his credit score. The severity of the impact varies dramatically depending on the corrective remedy employed. After a short sale, a credit score can drop 120-130 points. If the troubled homeowner intentionally walks away from his mortgage despite his ability to pay, called a strategic default, his credit may suffer a 140-150 deduction. In the most extreme case, the credit score of a homeowner who applies for bankruptcy protection will take a massive pummeling of 355-365 points. Lenders really despise bankruptcies and severely punish those who seek court protection from excess debt. [for further information see our Sept. 2009 first tuesday news blog, "Mortgage workouts take a toll on credit scores."]

By: DARREN WOODWORTH

DARREN WOODWORTH — Tue, 10 Nov 2009 18:49:32 +0000

I have a client who went through the loan modification with his mortgage servicer. They told him he made too much money to qualify for a loan modification after 6 months of review. He is a newly retired teacher this year his mortgage interest rate is at 9.25%. I tried to refinance him into a lower interest rate and he did not qualify do to credit score. He has lived in his home for the past 15 plus years and never has missed a payment up until his interest went from 6% to 9.25%. This mortgage servicing company is expecting him to contiue paying at the 9.25% interest rate that they say he qualifies for but doesn’t qualify for a lower interest rate. This is probalby the number 1 reason people who can make their mortgage payment stop making their mortgage payment and walk away from their homes. He has been dealing with this since last year 08/08/2008.

By: Dorothy Stephens

Dorothy Stephens — Tue, 10 Nov 2009 15:29:24 +0000

For some folks, in view of the horror of loan modifications, bankruptcy may be the best way out of this mess but most people don’t want this on their credit. So which is worst low credit score or bankruptcy what do you do besides pray?