User Feedback: Experts answer loan modification questions

SALT LAKE CITY -- Following our story about Utah Resident Mike Waters' court battle with Bank of America many of our users had lingering questions about loan modifications.

Marco Fields, Exec. Director of TEEMS Utah and Greg Mauer with Platinum Financial answer a series of questions which encompass the general theme of those submitted.

1. **How does a loan modification work? I would like to apply for one since I've been furloughed for the past two years but I have BOA too. - A.W., Maryland**Making Home Affordable Program: "If you are having a tough time making your mortgage payments for reasons not related to unemployment, you may qualify for HAMP. HAMP lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable." Greg Mauer: The MOST important thing for homeowners who are seeking a loan modification to know, and is not often made available to them, it's NOT what happens after the bank receives their modification package, but the preparation BEFORE the package is sent. The HAMP guidelines leave a very small window for a homeowner to actually qualify for a loan modification. The failure or success for a homeowner is greatly dependent on the initial package that is submitted to the banks. For free HUD counseling call 211 or go to utahhousing.org.
2. **I completed a loan modification with previous mortgage lender and at the exact same time, loan was sold to Bank of America. Now dealing with Bank of America who has no record of the modification. What should I do? - Otto C., Bluffdale**Marco Fields: Request a new loan modification with B of A and send all of your paperwork that you submitted to the previous lender and all of the documentation they sent to you. You will need to fill out Bank of Americas paperwork and sign all of their required forms. Don't just send the previous lenders paperwork and think they will accept it. They won't. You will be rejected and loose valuable time. You have to resubmit on Bank of Americas forms. I know it is frustrating and redundant but it is what B of A requires. This is your best chance to get B of A to work with you. You can do it! I would also highly recommend working with a HUD certified counselor to help you with the process. You can find one in your local area by dialing 211. They are highly trained to deal with your situation and their help is free.
3. **If I have been paying faithfully a modified payment for a year and a half and they end up not approving my modification that has been in the works that long, do I have any legal rights against them? - Connie T., Woodland Hills**Fields: Yes. Keep your documents from your servicer that shows they have been approved for the trial modification and that you have a reduced payment approved. If your lender has not given you a written agreement, and some servicers don't, they just send you payment coupon booklet, make sure you keep the agreement. If they are just sending you coupons then keep a copy of the coupons and request that they give you a statement of your loan modification terms. That is your golden ticket. Technically, once they give you a loan modification agreement that you have signed and sent back you can argue that the bank has modified your original trust deed. The Trust Deed is the instrument that you originally signed when you closed on your loan that outlined the terms of your loan such as interest rate, length of the loan and what your principle and interest payment is. You now have a leg to stand on. Keep good records of when you send in your payments and get copies of the cancelled checks. Send your payments either overnight or by certified mail so you can track the bank is receiving them and sent a certified bank checks whenever possible. If your bank ultimately denies your modification request and or starts foreclosure proceedings while they are processing your loan modification seek help immediately. Don't believe the bank when they tell you to ignore any notice. Whether it is a Notice of Default or a Notice to Sell take these notices seriously. The bank is winding the legal clock down on you. You have to get their actions stopped immediately. You can escalate it both within the bank as well as file a complaint with the The U.S. Department of the Treasury. If a customer service agent or loan negotiator says there is nothing they can do escalate it immediately. The servicers and lenders have full discretion to work with you. Often times it just means you have to get to the right person. There is always someone higher than the person you are talking to. If necessary hang up and call back to speak to someone different. Even if that means you have to call in five or six times to get someone on the phone who can offer help. If necessary you can take legal action including getting a Temporary Restraining Order (TRO) and a filing a complaint in your local district court. Don't be afraid. Don't let the bank intimidate you. You have rights. FIGHT FIGHT FIGHT!
4. **If they do not own the note than how can they foreclose on it! If they don't know then why shouldn't the court give the owner his house for free or go back to the last known owner of the note? Hasn't this been done successfully? I know someone else in this position and Bank of America is following a pattern of deception that they know or should know will cost people their homes. Isn't that some sort of fraud? Can they sue in civil court for other damages? - Wendy H., Ephraim**Fields: First I will disclose that I am not an attorney and cannot offer legal advice. I do have more than 20 years in mortgage banking and have a full understanding of what real estate lender and servicer requirements are under both state and federal law. That being said the answer to your question is yes. The lender cannot foreclose on your home without properly acquiring ownership of the note. This is a pervasive problem right now. The banks have been caught actually going back and trying to "bank date" filings to correct their errors. You can get a full history of the chain of title to your property by calling a customer service department of any local title company. Their customer service representatives are very helpful and can provide you with a history of the title to your home including all the transfers and assignments from the various lenders and trustees. And yes, you can sue. The lenders and servicers have to follow Utah law. If you have more questions you can actually go directly to the Utah code and read the stature. Utah Code-Title-57. The statute is consumer friendly to reading. You don't need a law degree to understand it. You can specifically reference section 57-1-15 effect of recording assignment of mortgage and 57-1-20 Transfer of Trust in real property, you can read for yourself what is required under Utah law. The other statue you may find helpful is Utah Code-Title 70 D 2 Financial Institutions Mortgage Finance Regulation Act. Ultimately you need to get with an advocate and a good attorney that can help you understand your rights and take action. I am shocked and appalled daily at what the national lenders and servicing intuitions are doing. A homeowner has rights. My advice, as always, FIGHT FIGHT FIGHT!
5. **Is loan modification really set up to help the clients or is it set up for failure? - Dee H., Salt Lake City**Mauer: It depends. The obvious benefit to the homeowner is once they get a modification they are no longer in foreclosure, past due payments have been put back into the loan, and they are able to move forward, usually with a lower payment (some unfortunate borrowers that have not used our services have seen INCREASED payments post-modification). The benefit to the bank is they are able to take a non-performing loan and start getting payments again. There is not really a benefit to the bank if the borrower is not late, other than to keep the loan from going late (if they don't mod the borrower will default). The bank uses the imminent default indicator test to determination if a borrower will qualify for a loan modification without being late. Unfortunately most homeowners do not know how to qualify for this. The down side to the bank is once a loan has been modified the re-default rate is extremely high and in most cases once they bank does modify they may lose any mortgage insurance that covers a future loss. If a homeowner has any equity they will not pass an NPV test (net present value) and will be denied for a modification. There is not much of a benefit to the bank as they can foreclose and get paid in full. Hopefully if a homeowner gets a modification it is a win-win for the borrower and bank. But you need to remember that in most cases the banks are publicly traded companies who's goal is to make a profit for shareholders. They will make their decisions accordingly.
6. **Can you tell me if this statement is true and what the case is? "[It] said that if somebody is in court pro se -- which is me, no attorney -- that their case can't be rejected or thrown out on technical grounds," Waters explained. - Robert N., Kaysville**KSL: The United States Supreme Court, in Haines v Kerner 404 U.S. 519 (1972), said that all litigants defending themselves must be afforded the opportunity to present their evidence and that the Court should look to the substance of the complaint rather than the form. In Platsky v CIA, 953 F.2d 26 (2nd Cir. 1991), the Circuit Court of Appeals allowed that the District Court should have explained to the litigant proceeding without a lawyer, the correct form to the plaintiff so that he could have amended his pleadings accordingly. Defendant respectfully reserves the right to amend this Pre Trial Brief.

This story written with contributions from Candice Madsen.

Related topics