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Real People Trying To Get A Loan Modification

Homeowners Say Banks Not Following Rules for Loan Modifications

by Paul Kiel ProPublica, Jan. 14, 2010, 11 a.m.

Nathan Reynolds is something of an expert on the government’s foreclosure prevention program. A mortgage broker who’s worked in the Chicago area since 1998, he’s seen both his business and his home’s value plummet in the past few years. After receiving his own trial loan modification from JPMorgan Chase, he’s helped others apply for modifications through the program on his own time.

Have you worked for a servicer in a loan modification call center? We want to hear from you.

Are you a homeowner who’s struggling to pay your mortgage? Are you seeking a loan modification through the government program? We want to hear from you.

But in November, after Reynolds had made trial loan payments for seven months, Chase told him his mortgage would not be permanently modified. Chase had determined that his personal financial troubles were only temporary because Reynolds had expressed optimism that the administratio’s policies might rescue the housing market, boosting his income.

That’s not a legitimate reason for a loan servicer to deny someone’s modification, according to the Treasury Department’s guidelines for the program. And Reynolds experience along with the cases of two other homeowners examined by ProPublica, shows how servicers have created unnecessary hurdles that, in some instances, violate the loan program’s rules.

Housing advocates say they frequently see homeowners rejected or kept in a trial modification for questionable reasons. “There’s a real resistance on the servicers part to making permanent modifications,” said Diane Thompson of the National Consumer Law Center.

The administration set a goal of helping up to 4 million homeowners through the $75 billion mortgage modification program as a way to blunt the boom in foreclosures. Treasury has produced a growing number of mandatory guidelines for banks and other loan servicers to review applications and perform the modifications. In exchange for tailoring loan payments to 31 percent of the homeowner’s monthly income, both the servicer and the owner of the loan receive incentive payments.

Servicers representing 85 percent of the housing market have signed up to participate. Applicants must first go through a trial period before their mortgage payments can be permanently reduced. But servicers have been slow to convert hundreds of thousands of trials into permanent modifications as of November, only about 31,000 had been made permanent. That spurred Treasury to publicly criticize the servicers performance and to put out new guidelines in recent months to speed up the process.

Treasury said recently (PDF) that the effort has resulted in a “significant increase” in offers of permanent modifications, but numbers demonstrating how significant won2019t be available until February.

ProPublica has reported since last June on homeowners frustrations in receiving a prompt answer from servicers, particularly the program’s largest servicers  Bank of America, JPMorgan Chase, Wells Fargo and CitiMortgage. In response to widespread complaints, those servicers have dramatically increased staffing and touted other improvements, such as new document management systems.

But when homeowners do get an answer, the reasons don’t always jibe with how the program is supposed to work. Housing advocates say this is a direct result of a lack of effective oversight of servicers in the program, something ProPublica has focused on before.

2018An Excuse to Deny Someone2019

Reynolds was a prime candidate for a loan adjustment and was among the earliest homeowners to receive a trial modification.

His mortgage brokerage business had followed the market downward, and as a result, he’d fallen three months behind on his interest-only mortgage. Area real estate cratered. His own home, bought in 2001 for just over $400,000, had rocketed up to about $1.2 million in value in 2006, and then down again to about $350,000. With a refinancing in 2005 and a home equity line of credit with Countrywide, his mortgage debt exceeded his home2019s value by more than 70 percent.

Soon after the loan program was announced last February, Reynolds applied. He received an application in late April and was accepted, making his first payment of about $2,400 (down from $3,300) in May. He made six more payments. Like many borrowers in the program, he says he was asked over and over to send the same documents and later, updated versions of those documents. Finally, in late November, he received an answer: He was denied a permanent loan modification.

The reason? A Chase employee explained to Reynolds that they’d determined his financial difficulties weren’t permanent. In his application, he’d written that he believed that the government’s rescue efforts would “save the U.S. housing market” and that his business “will once again be profitable.” The Chase employee told him that statement indicated his hardship was only temporary.

“That’s just nonsense,” said Thompson of the consumer center. “To me, that sounds like an excuse to deny someone.”

Chase spokeswoman Christine Holevas told ProPublica that Reynolds had been denied “because the skill and ability is still there to earn the income.” Since he’d “stated in his letter that business would be picking up,” it was “not considered a permanent hardship,” Holevas said.

Such a determination contradicts Treasury’s guidance to servicers for the program. A FAQ (PDF) issued to servicers says the program does not “distinguish between short-term and long-term hardships for eligibility purposes.”

When ProPublica asked about this guideline, Holevas did not directly respond. She did offer another reason for denying Reynolds: Chases review of financial information showed his income had not decreased.

Reynolds, who has a wife and two small children, says no Chase employee had made such a claim to him and that the documents he provided show that his mortgage business dropped more than 50 percent in 2009. He submitted a new hardship statement in December, in which he tried to make clear that his troubles are real and lasting. Holevas said those documents would be reviewed.

Now, Reynolds says his finances are at the breaking point and bankruptcy appears unavoidable if Chase denies him again. “I did everything that was asked of me, but Chase has me backed into a corner that I cannot get out of.”

The Nine-Month Trial

Six months into a trial modification, Gary Fitz of California still doesn2019t know whether or when his mortgage will be permanently modified, and he’s been told he2019ll have to wait for a few more months.

Under the program’s design, the trial period was supposed to last three months, giving time for the servicers to collect and evaluate the homeowner’s financial information. At the end of the trial, if the homeowner fit the program’s criteria and had made all three modified payments, the servicer was supposed to promptly make the modification permanent.

Instead, trial modifications routinely last more than six months, homeowners and housing advocates say.

There are a number of adverse consequences of a trial period’s dragging on, said the consumer law center2019s Thompson. Because a homeowner is not making a full payment, the balance of the mortgage grows during the trial period. The servicer reports the shortfall to credit reporting agencies, so the homeowner’s credit score can drop. And most important, says Thompson, the homeowner isn’t saving money in case the modification fails and the home is foreclosed. “Keeping someone in a trial modification really does not do them a favor,” she said.

Fitz2019s case shows why some homeowners have remained in limbo so long.

He sought a loan modification in the spring of 2009 because his wife’s salary had been cut. Like millions of others, he applied soon after the administration announced the program last February. He was accepted for a trial modification and made his first payment in July.

Fitz was prepared for an uphill struggle. A Wells Fargo customer service representative told him early in the application process that he should make seven copies of his financial information because Wells Fargo would likely lose it more than once. He says he’s sent the same paperwork in five times.

When the trial stage lasts so long, servicers commonly ask homeowners for updated financial information months into the trial period. Fitz, for example, submitted his paperwork for the first time last spring. But when Wells Fargo requested an updated package in December, it showed that he’d received a pay raise last June of about $80 per month.

Because of that, Wells Fargo started him over on a new trial period even though his trial payments climbed just $27, from $1,733 to $1,760. His first payment on the new trial period is due Feb. 1, meaning that by the time he completes it, he will have been making trial payments for nine months.

Wells Fargo spokesman Kevin Waetke said the company does not comment on individual borrower’s cases. He did say, however, that “the federal guidelines require a final review of updated financial documents before moving any Home Affordable Modification from trial status to complete.”

That’s not true. A Treasury guidance (PDF) to servicers issued in October, meant to streamline the review process, says there is “no requirement” to “refresh” the homeowner’s documentation as long as it was up-to-date when it was originally received.

Wells Fargo also appears to have begun Fitz’s second trial period contrary to Treasury guidelines. A Treasury guidance (PDF) last April said that a servicer should not begin a new trial period if a homeowner has only a minor income change (defined as exceeding the “initial income information by 25 percent or less”). Guidelines issued later (PDF) are even more restrictive about starting a new trial period. The reason is clear: The purpose of the trial period for the homeowner is to demonstrate the ability to pay, and such a small change in income is unlikely to affect that.

Asked to respond, Waetke said that “given the complexity of the program, the volume of calls we receive and the number of modifications currently in process, there is the potential for a mistake to be made.” He added that Wells Fargo would continue to review the case.

credit repair

Buying Time

Sometimes there seems to be no reason at all for a trial period to drag on.

Cynthia Mason of Texas, another homeowner with a Wells Fargo mortgage, also recently restarted her trial period after several months.

Last spring, she sought a loan modification because medical and other expenses had made it impossible for her to afford her mortgage payment on a fixed alimony income. She’d planned to supplement that income with a job, but has been unable to find anything. Like Fitz, she began the program in July.

In October, good news came with a phone call: She’d been accepted for a permanent modification. She waited for the final paperwork to arrive, but it never did. Instead, while speaking to a Wells Fargo employee about an unrelated issue six weeks later, she found out that she’d in fact been denied. When Mason inquired why, she says she was told some documentation was missing, but the employee could not tell her what it was. She also learned she owed late fees because she’d paid the modified payment, not the original, full payment, in November and December.

When she complained about the late fees (which were eventually canceled), she was passed to a different employee, who told her she was being put back into a trial period. She didn’t understand why. Another representative finally told her that she’d been denied because of a negative “Net Present Value” test. The test is the calculation at the center of the Treasury Department’s program: It determines whether the loans owner (sometimes the lender, sometimes a mortgage-backed security’s investors) is likely to make more money modifying the loan or not. A negative result means the servicer has no obligation under the program to modify the loan and is a common reason for denial.

But in Mason’s case, a Wells Fargo employee told her she’d nevertheless been put back into the trial period in order to “buy time.”

Wells Fargo spokesman Waetke declined to speak about Masons case but did say that the bank sometimes extends the trial period “to allow customers time to get the documents so we can complete the review.” Mason says she doesn’t know of any documents that might be missing, and she’s not optimistic about receiving a permanent modification. By extending the trial, Mason told ProPublica, Wells Fargo is “just prolonging the inevitable” denial.

Have you applied for a loan modification under the Obama administration’s Making Home Affordable program? Are you thinking about it? If so, we at ProPublica want to hear your story.

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If you have any questions about buying a Santa Maria home for sale in the Santa Maria Real Estate market or any properties on the Central Coastand need to get a loan in Santa Maria, CA or any where in the state of so I California not just on the Central Coast, so I can do California home loans, and first time home buyer loans, as well as refinance home loans and just plain simple mortgage loans.  So please contact me by sending me an email at: GenePerez@GMSLoans.net

I do also service all the nearby communities and other markets such as the Santa Ynez real estate market, Nipomo Real estate market, Arroyo Grande real estate market, Grover Beach Real Estate Market, and all other surrounding areas regarding the homes on the Central Coast.

my goal is to provide you with resources you need. I can also help in getting the financing for your home.  If you have any suggestions or questions in how I can provide more or better

information please let me know.  I have been helping my clients for the last 15 years  on the Central Coast, Gene Perez – 805-448-7101 , DRE 01321588

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Important Disclaimer: Questions and answers provided on this website and by Gene Perez is to be considered general information, and is not intended to substitute for informed professional financial, tax, legal, investment, accounting, or other professional advice.

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Lies On Loan Modifications

Did Your Servicer Lie To You About Denying The Loan Modification

Okay this  story not only affects the Santa Maria real estate market and upside down mortgage home loans but many seeking a loan modification. I know that this is kind of complicated so I am going to first break it down first, and we are just going to keep it simple AS POSSIBLE not get all complicated here.  You got a loan through Bank of America or Country Wide and what they did is they packaged all these loans and put them in what is called Mortgage Backed Securities Or MBS.  Now the investor can be a pension fund or a Mutual fund etc etc.  Now what confuses most people is that it does not say on your Mortgage Statement that T.Rowe price is who now owns your mortgage or is part of a thousand other mortgages all pooled together it can still say Bank of America or Wells Fargo etc.  So the bank you thought you had the loan with is really just servicing the loan they handle the paperwork, and the accounting all that good stuff.  They make money on servicing the loan for the investor handling on the little details that go into taking care of the loan.  Which can be a lot of work when you think of the thousands upon thousands of accounts the investors are just not set up to do it so that is why your statement still says Bank of America and so your bank actually becomes the servicer of the loan.


So now lets go forward in time and times are tough the interest rate has changed and you are trying to get loan modification because you just cannot keep up with the payments anymore.  So you are dealing with Wells Fargo and little did you know that Wells Fargo has to go to the investor to get approval to on your loan modification and this is where the games begin.

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getting a loan modification in santa maria

First let me say I am not a big fan of the big banks and there games nor am I a big fan of the bailout.  Since we did bailout the banks with billions of dollars and they were able to maintain the ability to continue to do what they felt like.  The HAMP program has proved to be anything but successful but for more reasons than one.  Please keep in mind that getting a loan modification can be done via the Bank OR THROUGH THE OBAMA PLAN.  I hope that some of this information can be of use to someone and help someone out in trying to save their home from a needless foreclosure.   Now if you do qualify under the guidelines for the Obama plan and you have an INVESTOR- OWNED MORTGAGE they have to give you a loan modification unless it is spelled out in the investor agreement no modifications allowed but a third of all modifications are investor loans.  CLICK HERE FOR OBAMA GUIDELINES FOR LOAN MODIFICATION. Sad to say that there are homes for sale in Santa Maria that are foreclosed on that possibly were forclosed on needlessly and only because it was in the best interest of the servicer.

 

The problem is that many Servicers are starting to state that the investor will not allow a modification and turning people down for the loan modification even when they could of been offered one.  Servicers collect more money when you go to foreclosure by charging fees and passing the costs on to the investor.  So its not really in thier best interest to help you get that loan modification, sure they do some here and there but overall they do a poor job of it.  The sad thing is that the servicer is in control and making decisions that are not in the best interest of either the investor or the homeowner.  Now what makes things even more frustrating is if the homeowner tries to contact the investor … he is clueless as to who the investor is and the bank (servicer) will not help but just make things more complicated.

Here is a great article on this topic. CLICK HERE News_Flash

Next Blog I will give you a few resources and things you can do to fight back if you still the have fight in you the banks can seriously wear a person down and even give you the impression that there is nothing you can do but if you still have some fight in you I will try to post a few resources that may be able to help you.

For A FREE List Of Foreclosures & Pre Foreclosures On The Central Coast Click HERE

If you have any questions about buying a Santa Maria home for sale in the Santa Maria Real Estate market or any properties on the Central Coastand need to get a loan in Santa Maria, CA or any where in the state of so I California not just on the Central Coast, so I can do California home loans, and first time home buyer loans, as well as refinance home loans and just plain simple mortgage loans. So please contact me by sending me an email at: GenePerez@GMSLoans.net

I do also service all the nearby communities and other markets such as the Santa Ynez real estate market, Nipomo Real estate market, Arroyo Grande real estate market, Grover Beach Real Estate Market, and all other surrounding areas regarding the homes on the Central Coast.

my goal is to provide you with resources you need. I can also help in getting the financing for your home. If you have any suggestions or questions in how I can provide more or better

information please let me know. I have been helping my clients for the last 15 years on the Central Coast, Gene Perez – 805-448-7101 , DRE 01321588

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Important Disclaimer: Questions and answers provided on this website and by Gene Perez is to be considered general information, and is not intended to substitute for informed professional financial, tax, legal, investment, accounting, or other professional advice.

Gene Perez is Licensed Real Estate Broker for Valley Hills Realty and a mortgage broker for Greater Mortgage Solutions.

This blog and its content is copyright of Gene Perez 2010. All rights reserved. Any redistribution or reproduction of part or all of the contents in any form is prohibited other than the following: you may print or download to a local hard disk extracts for your personal and non-commercial use only. You may copy the content to individual third parties for their personal use, but only if you acknowledge Gene Perez as the source of the material You may not, except with our express written permission, distribute or commercially exploit the content. Nor may you transmit it or store it in any other website or other form of electronic retrieval system without obtaining Gene Perez’s

 

 

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