My Loan Modification Was Denied by My Lender

I know, I wrote yesterday that I would write another hub next week, but I could not help myself. After I finished up yesterday, I called on a client's mortgage loan modification, and to my surprise, it was denied. Let me start from the beginning. January 2010, a past client comes to me for help with a modification on his personal residence. I contacted his lender, gathered all his financial information, that the lender, in this case CHASE was requiring, and began to assemble his package. Note, that sometimes getting what is required by the lender from the borrower is like pulling teeth, but I got every piece of information required. I faxed it to the correct department, and started the waiting period. I have all my client's information readily available and scheduled to call on once a week. Fine, the first two (2) times I called all was well. Then on the third week, a representative from Chase called the borrower. He came to my office with another list of requirements, which took about a week to assemble, please remember, it all has to be produced by the borrower. Turns out that the information has to be faxed to this particular representative's direct email fax. She gave me her direct line, and told me to call to get status updates. Since the first time I spoke to her, I have never had the pleasure again. Each and every call goes straight to voice mail, and never do I get a reply back, but hey, they do say each borrower is important. I do not get that warm and fuzzy feeling! Now, if you are attempting to modify your mortgage loan, it is necessary to understand the following: First, if you stop making the payments, which the lender requires you to do, then you are a borrower in default, and your lender does initiate foreclosure proceedings after defaulting on your loan for 3 consecutive months. At this point, the lender will go to the county recorder and file a Notice of Default against you and the property. This is a recorded document, PUBLIC RECORD. Visible and available for anyone who wants to see. There are many cases where borrowers are in their properties after a year, or maybe two (2) years, and have not made a payment. These are unusual cases. The norm is after 3 months of non payment, a notice of default is filed.

In my client's case, he has not made a mortgage payment is over 2 years, and a notice of default has never been filed. So, as I was writing, this process begins in January, and here we are in July, and I am still calling in regularly. Let me just tell you, that every month his financials have to be updated.  It is necessary as a borrower to understand this. Bank statements, paystubs, any financial shift has to be sent and communicated to your lender.  Well, anyway, yesterday when I called, at 3:30pm pst, I was told that the modification had been denied on 7/22/10.   Yesterday was July 26, 2010.  Do you think that someone called or there was any form of communication?  NEGATIVE! Nothing.  Ok, so I asked for the reasons for denial.  They could not tell me.   I had to call another department, they gave me the telephone number, I dialed, and of course.  They were closed.  That particular department is on the east coast.  I did call my borrower and let him know what was happening.  He did not sound to worried, but I did tell him I would be calling this morning.   8:00am I am on the phone calling.  At this number I speak to someone who gives me the reasons for the loan modification denial.  One, he was denied by the HAMP program, and secondly he could not get investor approval for his modification.  I asked for details, and reasons were given that include Net Present Value, which is when the lender reviews the credit report, income, trial payment, obligations, property taxes, and decides whether the borrower will be able to make the mortgage payments.  No, denied!    So, I ask, "is there anything else we can do". The agent says "well, maybe a forebearance".  Forebearance is used to divide the amount deliquent on the loan by whatever number of months they come up with, and add it to the present mortgage payment.  Think about this, my client's monthly mortgage payment NOT including taxes and insurance is $3,200.00 a months.  He is presently behind $64,000.00. (no, I did not make a mistake with the decimal point) Imagine what his monthly payment will be!  Further more, the agent tells me, "if that doesn't work, he may consider a deed in lieu of foreclosure, or short sale liquidation.

Ok, now this is serious.   I ask the agent if the notice of default will be filed soon?  This is something to worry about, because whatever the borrower decides, it will be necessary to postpone any Trustee Sale scheduled after the 3 months default notice.  Of course this agent has no information.  He sends me to Loss Mitigation. 

Now sit down for this.  Loss Mitigation says, "Oh No, he still has one more opportunity for approval, directly from Chase".  Aparently, not all the information given to me was correct.  Now I am told to keep calling back every other day to get status.  I told this agent, that someone has to make sure that the Notice of Default does not get filed, because of the 2 denials.  She said "don't worry". 

From all of this information, let me tell you, if you are currently modifying your mortgage, or attempting to modify, please keep calling in .  It is more than apparent that with these lenders, the right hand does not know what the left hand is doing, and the only ones who pay the consequences are the distressed homeowners.

 Thank you for reading my hub. I hope this information is useful.