According to a published article in the Detroit Free Press, a “loan modification to get a lower mortgage payment and stay in your home could impact your credit score. In some cases, consumers could see credit scores drop by 100 to 150 points.” If you have a home foreclosure, you could see your credit score drop by 45 to 100 points.
DHW asks: Do you think this credit scoring is fair?
]]>DHW asks: Have you applied for a loan modification with Barclays? If so, How was your experience?
]]>Overall, only 4% of enrolled borrowers successfully completed permanent loan modifications.
In recent weeks, critics of the president’s Home Affordable Modification Program (HAMP) have called for a more aggressive approach to loan modifications.
One overlooked resource
Generally, one of the requirements for successfully completing a loan modification under The Home Affordable Modification Program (HAMP) is using the services of a housing counselor. This service is free to the borrower and paid for by the government. The housing counselor will help you come up with a budget you can afford. The counselor is also your advocate. If you are having problems communicating with your lender, contact your counselor. To find a HUD-approved housing counselor, call 888-995-HOPE. They can refer you to a counselor in your area or arrange for an over-the-phone consultation. Remember, the HUD-approved housing counselor is free to borrowers and does not represent the interest of the lender.
If this approach fails, perhaps resort to the advice given on DHW a while back.
DHW asks: Have you applied for a loan modification under HAMP?
]]>Lockhart predicts foreclosures will “spike” unless the the Obama administration gets more aggressive with loan modifications. The former director of the FHFA feels greater principal reductions are in order to keep families in their homes.
For more information on loan modifications, visit the Government’s official website.
DHW asks: Do you agree with Mr. Lockhart?
]]>Mr. Pinto categorizes the three types of delinquent borrowers in his article:
(If you fall into category three, still call your lender for a loan modification using HAMP. With government pressure now on the industry to act quickly, you may find your lender to be more cooperative than in the past. If you fall into category two, contact your lender to request a short sale or deed-in-lieu of foreclosure.)
In October 2008, along with Peter Wallison, Edward Pinto wrote in the Wall Street Journal that government agencies bore a responsibility to “clean up the mess they had made by lowering underwriting standards to satisfy Congress’s desire to increase home ownership.” They suggested “that the loan principal could be reduced by an average of 20% to give owners equity—and with it an incentive to pay their mortgages.” They also suggested that mortgages “be modified to a 5% fixed rate loan with a 20-year term.”
DHW highly recommends that you read this article (this includes you too, Treasury).
DHW asks: Have you applied for a loan modification or short sale? If so, how was your experience?
]]>This information is also available under “Modification Center”
DHW asks: Do you think these programs will be game changers?
]]>DHW also added Housing Tax Credits. This page provides in-depth information regarding the recent extension and additions to the housing tax credits.
DHW asks: Have you applied for a loan modification? How was your experience?
]]>No doubt your lender gets tons of calls and emails a day. Don’t underestimate the impact a personal note can make. Remember the now infamous meltdown of Countrywide’s former CEO, Angelo Mozilo? After receiving impersonal email after impersonal email, Mozilo got mad as hell and wasn’t going to take it anymore. “This is unbelievable,” Mozilo wrote. “Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the Internet. Disgusting.” Mozilo’s frustration was understandable. Imagine if just one of his customers had taken the time to write him a nice, personal note. Below is a sample letter that may help solicit a quicker response from your lender. Of course, personalize your letter so as not to disgust the reader. I also suggest including a small, personal token of your appreciation.
Dear Sir or Madame (insert name of lender’s CEO here):
I hope this letter finds you doing well. So much has happened since we bought our home on Bonnet Drive. Our little girl, Suzie, starts kindergarten this year and Bobby Jr. now has his driver’s license. They grow so quickly, don’t they?
I’m writing you this letter because I have attempted several times to reach your company by phone and email regarding a loan modification. No one has returned my inquiries. We are in financial distress and need to reduce our house payments to avoid foreclosure. I know you and your company get so many calls that it must be difficult to keep all the names straight. To help you remember our home, I included a doorknob with this letter. If you’re still a little foggy about the details, don’t worry. I will continue to send you more artifacts from our home until it becomes clear. Surely my garbage disposer and toilet brush will help you remember.
I look forward to catching up with you.
All the best,
John or Jane Doe
Loan # 11111111111
DHW asks: Have you attempted a loan modification? Were you successful?