Modification Question...

[roachbugg]

Hello board...

 

Can you help with any advice in this situation:

 

Here's the deal:

 

I have a friend who bought a home in 2005 using a stated income loan (i know that people knock these loans, but at the time she thought that was her best deal). She financed 90% of 325K at 7.5% fixed. She had made all of her payments on time- even though she lost her job and had to take another one- at substantially lower salary, but still maintains a very good FICO score (700+).

 

Here is the question- is there anything that she can do to lower her interest rate on the mortgage.

 

Again, she makes her payments on time- with the help of her daughter who lives with her. She never refinanced because the lenders she went to charged so much in fees that it wasn't worthwhile for her. Can someone walk me through what she would need to do to modify the interest rate? She doesn't want to refinance (and pay 10K) to save $200 per month (this is at a 5.5 rate), but her mortgage company won't help her- because she is not behind on the mortgage. She doesn't want to miss a payment, because her credit score would tank. Is there anything that she can do. Her daughter has credit issues, but makes a decent monthly salary- and she helps out with the mortgage, but cannot get on the loan.

 

Any ideas? The mortgage company is national city. Any ideas would be appreciated. thanks

[ishmael109]

Loan modifications are typically given to folks who cannot afford the monthly payment on the note, and do not have the option to refinance into a lower interest rate, as they don't have equity in the home. If your friend has equity, the refi may be the only option right now.

Your best bet is to call the "early loss mitigation" or "loss mitigation" department at your mortgage company, and ask about what options are available for this particular mortgage. Good luck!

[Living Modifications]

Based on certain signed documents by the goverment early this month, the bank should be able to offer her a modification process without the need of destroying her credit. I hate to say this, but what she needs is representation. You need to go to the loss mitigation department and try 1 more time. If she doesn't get the response she's looking for i recommend writing a certified letter reminding her lender who's covering the loss from her modification. Banks will get a lot of money for agreeing to modify existing mortgages that are not yet in the RED. The reason she received the answer with lack of interest is because her loan is a performing portfolio piece for the bank and believe me... they sure don't have too many of those now-a-days. There's a way to get everything done. You just have to be consistant with it. My recommendation is keep trying with loss mitigation and maybe if they still show no interest, mention that you do have representation and the next call will be from them...

 

If you need help with wording a proper speach for that department, let me know. I would also recommend performing a Mortgage Fraud Examination on your file. It seems that if your friends score is in the 700... getting a rate of 7.5 is rather high. You might find certain RESPA/HUD violations that could help with switching straight from the loss mitigation department to the legal department of your lender... and believe me... it's a whole different type of conversation there. If you're holding strong documentation, you usally get what you want within that certain weeks end. I can help with closing package review.

[cinderella]

Based on certain signed documents by the goverment early this month, the bank should be able to offer her a modification process without the need of destroying her credit. I hate to say this, but what she needs is representation. You need to go to the loss mitigation department and try 1 more time. If she doesn't get the response she's looking for i recommend writing a certified letter reminding her lender who's covering the loss from her modification. Banks will get a lot of money for agreeing to modify existing mortgages that are not yet in the RED. The reason she received the answer with lack of interest is because her loan is a performing portfolio piece for the bank and believe me... they sure don't have too many of those now-a-days. There's a way to get everything done. You just have to be consistant with it. My recommendation is keep trying with loss mitigation and maybe if they still show no interest, mention that you do have representation and the next call will be from them...

 

If you need help with wording a proper speach for that department, let me know. I would also recommend performing a Mortgage Fraud Examination on your file. It seems that if your friends score is in the 700... getting a rate of 7.5 is rather high. You might find certain RESPA/HUD violations that could help with switching straight from the loss mitigation department to the legal department of your lender... and believe me... it's a whole different type of conversation there. If you're holding strong documentation, you usally get what you want within that certain weeks end. I can help with closing package review.

 

 

The reason she received the answer with lack of interest is because her loan is a performing portfolio piece for the bank and believe me... they sure don't have too many of those now-a-days.

I disagree. About 90% of homeowners are current on their mortgage.

 

 

You might find certain RESPA/HUD violations that could help with switching straight from the loss mitigation department to the legal department of your lender... and believe me... it's a whole different type of conversation there. If you're holding strong documentation, you usally get what you want within that certain weeks end. I can help with closing package review.

 

RESPA - TILA violations..........eh. Besides, OP claimed her friend had a stated income loan. That finger can point both ways and right back at the friend if the stated income was not correct.

 

Based on certain signed documents by the goverment early this month, the bank should be able to offer her a modification process without the need of destroying her credit.

 

Sure. How many people do you know have received a loan modification based on these signed docs?

 

 

 

A 5.5% is a pretty good rate. How much does the mortgage need to be reduced according to your friend? When you are current with your mortgage, it is difficult to argue an inability to pay, from the lenders eyes, often it does not need to be reduced by anything if the homeowner is current.

 

If an inability is the reason for the mod. request, what about extending the term of the loan to a 40 year, would that solve the problem?

Edited April 8, 2009 by cinderella

[lcabassa]

National city Mortgage does seem to respond well if you are having problems making your payments. but the fact that she is making on time payments will delay her modification. But with these changes in this business you never know. just keep trying re sent the paper work. if that does not work. maybe she might need a lawyer to help her.

[Move4ward]

Her major problem is not that she is a performing loan. It's that the loan modification department is swamped and the new hires are still learning the job. Even though she is current, she qualifies for a loan modification through financial hardship and loss of income. The bank gets even more money for modifying loans before they become delinquent.

 

Her payments are probably over 31% of her gross income, so she can get her payments lowered to 31% of gross income. Don't be surprised if it takes 3-6 months for the modification to process. The bank has to fill out additional paperwork to get the incentive money from the federal government.

 

She should check about every 2 weeks to keep the process flowing. If she is missing a document, they might not get back to her for a month. They'll just process another loan modification that has everything in place.