So your mortgage modification failed, now what? So you finished your application, provided the necessary documentation (4 Times!) and completed your “trial period”, but your mortgage modification was
STILL DENIED.
Unfortunately this is a common theme among many American households.
CNN reported that more troubled homeowners have fallen out of trial mortgage modifications than have received long-term help,
a new government report shows.
In general the HAMP and HEMP mortgage modification programs created by the Obama Administration have been a bureaucratic nightmare for the applicants.
I have seen scores of clients with a paper trail a mile long looking to prove their diligence in the matter.
The problem is there is not much I can do to facilitate the mortgage modification process by the time they get to my office.
From what I can gather, the program was almost set up to fail.
At the end of the day, even if a potential applicant complies with
EVERY requirement of the program, the mortgage company can
STILL DENY the loan modification based upon an internal decision making process.
There are no “checks” or “balances” on the program and from what I have seen in
my office,
LONG TERM mortgage modifications are far and few between.
Essentially, if a mortgage modification is denied, there is no “appeal process” and a borrower is usually left in a very difficult spot.
I have seen a few individuals that legitimately made their way through the trial phase of the mortgage modification program only to be denied for a permanent loan modification. I truly feel for these individuals as they were essentially lulled into a false sense of security on the matter. They truly had no idea that the denial was even a possibility. The client was left picking up the pieces in a “worst-case scenario” type of situation.
Even worse, I have seen clients that managed to get mixed up with scam mortgage modification companies.
There are scores of these companies on the Net and I have also seen them directly solicit business in a foreclosure situation.
These companies usually advise you to stop paying your mortgage while they “work it out”.
Of course, they require a large upfront fee before they begin the “negotiation process”.
For the most part, by the time my clients realized they were being scammed, it was too late.
I have seen scores of past clients fall deep into foreclosure or even lose their home altogether when these “companies” strike.
CNN has even done a piece on the growing epidemic.
The best advice I can give to those considering mortgage modification is to tread lightly. In other words, you MUST have a backup plan if, or likely when, the mortgage modification fails. If you are in foreclosure, DO NOT “bank” on an ongoing modification application. The longer to wait to get real help, the less likely it is that you will keep your home. I have seen several clients wait for the mortgage modification “decision” almost up until the day before a sheriff sale. Somehow, my clients were apparently led on to believe that the application was still being processed, while the bank’s attorney was “full steam ahead” with the foreclosure process.
A Chapter 13 bankruptcy filing can create
CERTAINTY in this chaotic situation.
Usually, I can tell my clients exactly where they will stand with their mortgage company and other creditors at the end of the bankruptcy process.
For instance, a Chapter 13 will immediately stop the foreclosure process with little exception.
My clients typically use Chapter 13 to “clean up” a botched mortgage modification attempt.
Chapter 13 can also eliminate or reduce other debt problems such as credit cards, personal loans, medical bills and the like; allowing my clients to focus all disposable income on saving their home.
Also, most people do not know that Chapter 13 can eliminate problematic, high interest, second mortgages in certain scenarios. All of these options are under the auspices of the United States Bankruptcy Courts.
In other words, creditors must act in a logical, legal way when a bankruptcy is filed and my clients no longer feel like a “leaf in the wind”.
The only true way to know what is right for you and your family is to seek REAL HELP. At the very least, you will leave from my office knowing what your realistic options are for the future. Ignorance is NOT bliss when dealing with a failed mortgage modification. I can tell you, without exception, the sooner you act, the better the odds will be of you saving your home.
DO NOT CONSTRUE THIS BLOG AS LEGAL ADVICE FOR YOUR SPECIFIC SITUATION. You must consult competent counsel for the answers to your FACT SPECIFIC scenario.
Feel free to
contact my office today to discuss your situation with me personally at several convenient locations in Western Pennsylvania.
10:35 PM
MrDebtBuster
2010 was a tough year for many Americans, and many of our clients. As the year comes to a close, we want to wish you a safe, happy and prosperous 2011!
Posted in
