4 steps to success in getting a loan modification and avoiding foreclosure
4 steps to success in getting a loan modification and avoiding foreclosure
If you are falling behind on your mortgage, or you are even facing foreclosure, then you need to take immediate action before it is too late. Often the solution is to get a “loan modification” so your payments will be affordable. (Loan modification is one form of loss mitigation).
Unfortunately many people do not understand the steps to take to be successful in getting a loan modification.
[NOTE: Loan modification is one of five (5) options you have to stop a foreclosure without filing bankruptcy].
Here are four steps to help you. By the way I was talking with a friend and a client who said these to me as a summary of what we discussed and I thought it was really good so I’m stealing it. 🙂 I’ve added a fourth bonus step that is now important with the new federal RESPA rules in place as of January 10, 2014.
The four steps are:
- Give the mortgage company everything it wants
- Document every contact you have with the mortgage company
- Take immediate action
- Follow up on any mistakes or contradictions by the mortgage company with requests for information and notices of errors.
Let’s look at these in a bit more detail.
Give the mortgage company everything it wants
Your mortgage company will ask you for lots of documents and information. This will include:
- Tax returns
- Profit and loss statement
- Payroll stubs
- Checking account information
- Listing all sources of income
- Explanation for why you fell behind
Some of what you will be asked for will make sense. Some won’t.
If you want to get a loan modification, play by their rules. Give them what they want.
The bigger challenge is facing the frustration of being asked to provide documents over and over. The same documents over and over.
You can get mad and refuse to do it.
Or you can just send the documents again.
My suggestion is if it is important to you to get the loan modification, then send the documents again.
Document every contact you have with the mortgage company
Understand that the mortgage company will lie to you.
And over the phone.
With no hesitation or remorse.
These companies will swear under oath that Alabama consumers should expect the bank to lie to them.
So what do you do?
Document every call. Every letter.
- Save every letter including the envelope. So the letter dated May 1 that gives you till May 15 to return documents? Important to have the envelope showing it was postmarked May 12.
- Keep a phone log of every call. You can do this by hand or make all calls from your cell phone and take a screen shot of the call showing the date, time, length and phone number of the call.
- In your phone log, document every call — who you spoke with, the content of the call, and what each person agreed to do.
- After every call, send a letter to the mortgage company detailing the call.
- Send information multiple ways. Fax (keeping a confirmation sheet), mail (certified only), and overnight mail (UPS/FedEx). Make sure you can prove the information you sent was received.
- Keep an exact copy of every single thing you send the mortgage company. Even if you already know you have a copy — make another one. So if you send in a loan modification package on May 15 and the same package on June 15, have two separate folders with the complete package in each folder for your records. Make it easy on yourself if you ever need to prove what you sent — you pull the folder, it has the fax confirmation, the certified mail green card signed, etc.
We have people tell us this is too much work.
“You don’t understand, I work and my son has baseball in the evenings. I don’t have time to do this.”
“We both work hard and we want to relax when we get home, not stay on the phone and make all of these silly copies.”
“I trust the mortgage company will keep recordings of all my calls and will save all my information I send to them.”
But don’t complain when you lose your home. Don’t complain about the unfairness of it all and how you never imagined this could happen. Don’t complain about how you don’t have time to pack up and move and how this is your family property given to you by your grandmother.
Either do the work and protect yourself or you can trust the mortgage company and be at their mercy.
I suggest you document and protect yourself even if you lose a little bit of sleep. If your home is important to you.
Take immediate action
We meet with potential clients who tell us saving their home is the most important thing.
But when we tell them to send the modification package or go get documents they need, they say “I’ll get to that next week.”
Do it now.
The time to wait and procrastinate is over.
You are in a bad position being behind on your mortgage. Time is your enemy.
There are very strict deadlines in getting modifications and using the new RESPA rules to save your home.
So treat this as seriously as it deserves by taking immediate action.
But today. Right now.
Follow up on any mistakes or contradictions by the mortgage company with requests for information and notices of errors.
Often what the mortgage servicer sends you won’t make sense. Either it contradicts what they told you or it is just flat out wrong.
Here’s some examples.
- You send in your package. You know it was delivered by FedEx because you carefully documented everything. Ocwen says it never received it. That’s false. And this is the reason Ocwen denied your loan modification.
- You get a letter from Nationstar saying your package is complete. The next day a letter says you didn’t send in everything. That contradicts.
- You get a letter saying send in your profit and loss statements. You send it in. Then you get another letter saying to send it in. But you also get a letter thanking you for sending it in.
The examples above can be multiplied like the stars in the sky. I’ve given up being surprised by the mortgage companies and their almost incomprehensible letters they send often send out.
When you get information like this, immediately send two types of letters.
First, a request for information. Ask specifically what the mortgage company wants or what it means by the letter. Explain why it is confusing and contradictory. Or just flat out wrong.
Second, a notice of error should almost always go with every request for information (and vice versa). Point out the information from the mortgage company is wrong and why. Ask the mortgage company to correct it.
Here are some examples:
- When Ocwen says it never got your package. You send a request for information asking when did it receive it or is it claiming it never got your package. Enclose the proof of delivery and ask Ocwen to look again. Also send a notice of error pointing out the false statement, enclose the proof, and ask Ocwen to fix this. This includes considering your loan modification package and stopping the foreclosure that has been set.
- When Nationstar says it got your package and it is complete but the next day you get a letter saying it is not complete, then send in the letters. First, ask why it sent these two letters and to tell you whether it is complete or not. Then the notice of error says this is false. Nationstar has the information so withdraw the letter saying it is not complete. (I also suggest sending the information again to be safe but do send these letters also).
We talk about these notice of errors and request for information letters in depth in an article/video for you. The point is to not let anything crazy from the mortgage company go without being challenged. The “world” changed on January 10, 2014 and what these mortgage companies used to could do is no longer the case.
Conclusion — move quickly and thoroughly to save your home
You have to be deadly serious about saving your home. Take immediate action and take the time to be very careful to document everything.
This can be a challenge to do on your own but if you invest the time and effort, you can do this.
Or you may prefer for us to do it for you if you live in Alabama. We can help with parts of this — it will still require work on your end but we can help you get there much easier as we have been down the same path you are traveling many times. You may prefer to do it yourself using trial and error or you may prefer the faster route of letting us help you.
Whichever course you choose, best wishes with saving your home!
(If we can help, call us at 205-879-2447 or fill out our contact form. Note we only help Alabama consumers so if you are in another state please contact a knowledgeable and experienced lawyer in your state.)