Has anyone applied for and/or recieved a loan modification on your mortgage?

We recieved ours today, and while it was worth it in the end, the red tape and stress has been overwhelming.

I did mine myself - and it didn't cost me anything. Our interest rate is rock bottom, and our payment is less than what most people pay for an apartment.

The papers came via Fed Ex this morning, we have to sign them and send them back with our first payment. There is no balloon payment at the end of our loan either. It was well worth it. But the person we worked with said there aren't near enough people applying for the modifications. It was mandatory in our case that we had a financial setback; either a medical condition, a drop in income or something along those lines. For us, my husband was suddenly laid off from job he held for 10 years. They called him back after 5 months but suffered a cut in pay.

It's hard but at least this modification will make a huge difference.

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Catt
~ Mirror Mirror on the wall, I am my mother - after all! ~

OMG! The stress, the paperwork, the "run around"---I have been brought to tears numerous times during the process.

MetLife has been an absolute HORROR to work with for a modification. I have never get the same information twice! No one seem to know what anyone else is doing. I finally had to contact the state dept. of fair housing, and then had to get HAMP (federal office of fair housing).

It's been a been a long, brutal and trying process--and I'm not done yet!

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Mental that one, I'm telling you. ---Ron Weasley, "Harry Potter and the Chamber of Secrets"

Oh bless your heart - I wondered if it was as stressful for everyone else or if it was just me!

The hardest part, was not paying the mortgage - we were told if we were behind, it helps with the ending number. The government is helping but if you are making your payments, you are not a priority. In our case, we put the monthly payments on a prepaid debit card so the money was there in case something happened because I couldn't do it without a net. But man, they asked for verification on every single thing! I kept waiting for them to ask for a blood sample, sheesh.

Stick with it - our payment wasn't out of sight to begin with, and the one thing that worked against us was the fact we did have a significant amount of equity.

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Catt
~ Mirror Mirror on the wall, I am my mother - after all! ~

I'm not comparing our headaches to yours, I know that ours was easy in comparison but all we did was refinance a few months ago and I could not believe the amount of paper work required. We refied a couple of years ago and it took no time or effort at all. This was a several month long endurance test. And when we went to sign, there were at least 40 papers to sign, (the stack was about an 1 1/2 tall), and or initial. It took over an hour just to sign. We had added our son-in-law and daughter to the deed and the mortgage some time before. SIl is working out of state and doesn't get home all that often and they would not allow him to sign from another state. He had to go to our location within 24 hours of the rest of us signing. My daughter at the same time was refinancing a rental she has in Az and they sent the closers and notary to her place of work here in St. Louis. Talk about nice service. And a complete contrast to our dealings with BofA.

I think they are so busy covering their backsides that no one really knows what is going on.

I'm just glad ours if over with for a while, (I hope!). I'm so sorry that you both had to go through the nightmare of dealing with this.

I guess in real estate, regardless of what situation, there is a lot of paperwork.

wildwood, did you refinance to lower your payment or to get a fixed interest rate?

In our case, we already had a fixed rate, equity in our loan and we weren't behind. So the first time we applied we weren't behind on our mortgage, so the only thing we could do was reduce the amount by $50. You would not believe the loops we had to jump through only to find out we qualified for a reduced payment of $50. Then we talked to someone at our mortgage company and they told us we needed to be fall behind a bit on the payments. He told us the exact number of days you had to go with no payments before they started foreclosure (ours was 90 days) and for me to keep up with the days. That part drove me crazy. On a modification, they won't let you get cash back but we didn't want that, we were thinking long term on the interest rate. Thank goodness it paid off.

We were told people like us getting approved is pretty easy even though every day we had to send some other verification or document. If ours was 'easy' then I'd end up in rocking back and forth in a fetal position on a hard case! Most people who apply have lost significant income and are upside down on their loans. There used to be a time when your credit had to be spotless to qualify for a home loan but they changed that. Now people are feeling the pinch of heading into an ARM after the initial 5 year fixed, didn't clean up their credit so they couldn't refinance and most people just walked away. Sad.

You have to watch out for the scams out there, but it's a great program I think. Oh and the call center for our mortgage company is in India - that combined with my southern twang just added to the fun!

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Catt
~ Mirror Mirror on the wall, I am my mother - after all! ~

Didn't missing those payments tear your credit score apart?

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"When you're drowning, you don't say 'I would be incredibly pleased if someone would have the foresight to notice me drowning and come and help me,' you just scream."

John Lennon

It will ding it a little but not much. But with only 2/3 of the income my husband was making, we seriously needed the cut in our monthly payment.

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Catt
~ Mirror Mirror on the wall, I am my mother - after all! ~

I understand, I was just curious, because my cousin missed two payments on hers and her score dropped close to 100 points.

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"When you're drowning, you don't say 'I would be incredibly pleased if someone would have the foresight to notice me drowning and come and help me,' you just scream."

John Lennon

Wow, 100 points? They told us it wouldn't damage it much if any. Hubby checked as soon as you posted it, and it looks the same but it might take 30-60 days for them to update it. Is your cousin okay now? Are they eligible for the modification program?

We are lucky we have no credit card debt. We've owned this house since 1997 so we were lucky on that too. Before he was laid off, we had purchased 2 vehicles that were new, a 2007 Kia Sedona and a 2008 Impala both of which we paid cash for with no car payments. But in February or so I went to get in the van to go to the grocery and the entire inside was burned. Our auto insurance investigated and concluded the fire started in the steering column and totaled it. We weighed the advantages of paying cash for a used one, but ultimately decided we wanted one with low miles, so we do have a small car payment now. In the end, that's what helped us get the mortgage reduced too. What worries me is there are so many scams out there regarding these programs. We were told right off the bat if anyone asked us for any money, it is either a scam or a company that acts as a go-between. A modification shouldn't cost anything. And to watch out for a balloon at the end of your loan. Some people are signing forms and realizing that even though it might be +years off, they are getting hit with a lump sum at the end of the loan. That's how they reduce the payments, you aren't getting a lower interest rate, they are tacking some on at the end to reduce what you are paying now.

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Catt
~ Mirror Mirror on the wall, I am my mother - after all! ~

I hope it will be okay for you. She was not trying to do that program. She just missed two payments when she lost her job. She got another job pretty quickly and caught up, but her score is still a mess.

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"When you're drowning, you don't say 'I would be incredibly pleased if someone would have the foresight to notice me drowning and come and help me,' you just scream."

John Lennon

I am really sorry to hear that, so many people are losing jobs. With our situation, my husband was in management at a company here and we thought it was stable - the company was actually posting profits. But they called him in (right before the holidays no less) and told him he was being laid off along with 80 others. But not only were we sweating the job loss, we were sweating our health insurance. Both Matt and our youngest son take a bunch of medicine and even with Cobra and the government picking up part of the tab, to keep our health insurance was going to be more than our mortgage payment. They told him if he took another job with the company before 5 months passed, he could keep his seniority and benefits. As it turns out, they called him just 4 days short of the deadline with a job offer in another department but less money. He had to take it. It's been a struggle and we had to change some things, but we were luckier than most people. Our state has been hit hard with foreclosures, it breaks my heart.

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Catt
~ Mirror Mirror on the wall, I am my mother - after all! ~

I'm not totally sure why we refinanced when we did. My husband was looking for a really low interest rate I think and succeeded in getting it. It lowered our monthly payments by a couple of hundred I think. I don't pay much attention to that stuff, I just sign where they point to. I did the bills and taxes for years while he was working and almost gave myself ulcers. When he retired I handed it all over to him and haven't looked back.

We have an unusual situation in that our daughter and grandson live with us, legally SIl does too, but he travels so much that he is only here for about 4 to 6 days a month. They have lived with us for about 9 years now and not too long ago we put them on the deed to the house. When we die, we didn't want grandson to have to be uprooted because they didn't have their names on the house.

So do you eventually have to pay back the amount you borrowed or is some forgiven?

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The political system is broke and it's a joke.

There are about three different options that mortgage companies have:
1) lower the interest rate (permanently)
2) extend the loan
3) forbearance for x amount of time

They can "forgive" part of the debt, but is not common & is not likely. So, you still end up paying back the majority of what you borrow.
(at least that's how the loan modification was explained to me)

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Mental that one, I'm telling you. ---Ron Weasley, "Harry Potter and the Chamber of Secrets"

my husband was diagnosed with colon cancer and had to shut down his one man business for chemo treatments. We applied for the loan modification and accepted. for 6 months we paid the lower payment. Then we got a letter saying 'nope. no more' , just out of the blue, and to repay the money we saved ( over $500/mo) immediately. ha! what a joke that was! so beware. I googled this when it happened and we were not the only ones this happened to.

So let me understand this? A person gets a mortgage, promises to pay it then some of it is forgiven? That doesn't seem right to me. Will you ever pay it back even if you don't have to? So who gets screwed? The bank? Or does the government pay the rest with taxpayer money? I'm just trying to understand here.

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The political system is broke and it's a joke.

I can only speak from my understanding of my mortgage company:

They can lower the interest rate.
They can extend the life of the loan.
They can forgive part of the loan.
They can give a forbearance.

I do not know if, when they forgive part of the loan, the government pays any of the forgiven part of the loan.

Who gets screwed? Mortgage companies who gave out loans when they shouldn't have, or are charging higher than necessary interest rates.

If the mortgage companies choose not to grant a modification--there will be a flood on the housing market (even more than there are now). Then where will the entire economy will suffer. It's in the best interest of EVERYONE for the mortgage companies to grant modifications.
I started the process of applying for loan modification over 6 months ago--due to Ex not paying child support, thus dropping my income. When we bought our house, the payments were affordable. When we divorced (and Ex paid his child support) payments were affordable. When Ex couldn't/didn't pay child support, payments were not affordable---and THEN, I lost my job....

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Mental that one, I'm telling you. ---Ron Weasley, "Harry Potter and the Chamber of Secrets"

I just saw this article - if you qualify for this apply NOW as the $ will run out FAST...it says people can receive up to 50K at zero interest...

Act Fast for Mortgage Bail-Out - CBS MoneyWatch.com

It is not always the mortgage company's fault. At some point, people have to cowboy /cowgirl up and realize they can't afford every singe thing they want! It's not that hard to live within your means when you apply for the loan!

Woe is me, I didn't get help on the cash for clunkers, the cash for appliances, and now this, much less any other handouts. People who can't be responsible shouldn't be taken care of, they should live the consequences of their decisions.

dl

I don't totally agree with you and I don't totally disagree with you.

I was thinking the other day about when I was just married, eons ago, and the accepted loan amount for a house was three times your yearly income. Whatever happened to that little rule of thumb? I'm old and haven't kept up with today's salaries, but I don't think that rule comes into play any more, at least not like it should.

But I also think that if I ask for a loan and someone gives it to me without knowing whether I can pay it back, then it's their fault. It's their job to find out who they should lend to and who they shouldn't. I'm just asking, it's up to them to say no.

ww - I remember it was a % of your income, seems like 25% or 33% or something like that - a definite formula that was followed.

I will say when buying our first home, we were told the high end of home prices we could afford based on the formula. I didn't like that at all. I said to the rep, let's try it this way. I have "x" amount to put down, and I have "x" amount I can spend monthly. He was befuddled. However, we got an affordable home and I even could make extra principal payments.

It is the person's responsibility to know what can be reasonably afforded. Period.

dl

That's how I feel. We were offered a loan of over double what our home cost. The loan guy started doing some fancy footwork about how "after three years your house will go up so far in value you can refinance...blah blah blah" .
He was befuddled, absolutely beside himself when I said "no thank you we want a house we can afford the payments on."
He kept trying to talk me into it. This was 2005. A lot of people fell for that song and dance. Instead of prices going up they declined at a considerable rate.
I totally understand things like deathly diseases and losing your job but this sounds kind of like bailing people out of something they shouldn't of gotten themselves into in the first place.
I am sorry this is nothing personal to those of you who are using this program but I am ...well I can't even find the word. So I have to work three jobs to pay my bills why don't I just quit one or all of my jobs and let other people pay my mortgage for me?
I'm not yelling I'm not being mean I just see this as another sign of our country going in the socialist direction. Can't take care of yourself? No worries let the government do it for you.

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The political system is broke and it's a joke.

I'm not at all for the government bailing people out.

However...

The reality is, people who are first time homebuyers think the experts they are dealing with understand the process better than they themselves do. In most normal economic cycles, people's incomes go up, not down. So the payment that is a stretch today likely won't be a stretch tomorrow - at least not in normal economies.

As an example... I have been married almost 25 years. Our first house cost us a whopping $34K. The house payment - which included taxes and insurance - was around $340ish / month. We actually qualified for a loan that would've covered a more expensive house, but I was 20 years old at the time and even the thought of borrowing $34K scared the snot out of me. At that point in our young lives, $34,000 felt like $34,000,000! And the $340 / month took a big bite out of our income.

Had we stayed in that house for the life of the loan, today we'd have just over five years left on it. $340 sounds like a pretty small house payment, even in today's economy. And the house recently sold for nearly $100,000. We ourselves sold it 15 years into our marriage for about $70K after having paid it off early.

So when people look at investing in real estate in the long term, I think that sometimes there are legitimate reasons to take out a loan that MIGHT feel like a bit of a stretch in the 'right now'. I'm not talking about situations in which one truly can't afford the payments. In our situation, we lived very lean to make our payments, but we felt in the long run it would pay off for us... and it did.

But the truth is, we were young and inexperienced, and I'm thankful we had a good 'gut feeling' and listened to it. Not everybody gets those gut feelings, and they get in over their heads.

Over the life of a loan, a bank will make about twice the value of the loan in interest. Had we paid our $34K house off in 30 years, the bank would have made $64K in interest (roughly).

So if a bank wants to forgive part of the loan, that's their business... and my guess is that the bank will STILL make plenty off of those loans. Just not as much as they originally intended. If a $200,000 was going to generate $400,000 in interest for the bank, if the bank forgives $20K of the loan, effectively making it a $180K loan, they will still make $360K in interest.

Again - rough figures that are not exact!

I do NOT like the idea of the government giving money to help get people's loan amounts down. The government is part of what CAUSED this mess because they mandated that lending institutions give loans to low income people who really had no business taking on loans of that magnitude. They did it in the name of 'helping' people have a hand up, wanting home ownership to be something every American could realize.

Unfortunately, the best way for anybody to be able to realize a home of their own is to prove themselves capable of managing their money well enough to qualify for a loan that hasn't been 'created' for people in dire financial straits. Some people, for whatever reason, would be better off to be renters, and that's okay. No shame in that, as long as you pay your rent.

So the finance company just eats it? That's a different story however why not just take all mortgages/refinances between such and such years and forgive a percentage of the principal? Maybe as a penalty to all the companies that sold bad loans?

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The political system is broke and it's a joke.

wow - You used the following terms:

scared the snot out of me
young lives
big bite out of our income
lived very lean
gut feeling

None, or very little of that exists in today's mindset. Today it is:

I want
I want it now
I deserve it
I should have it
I should have it the way I want it

You (and I) had responsible feelings, evaluations, decisions. No more, it's not there. Our socio - thought process has shifted and when people fall, it's never, ever their fault.

With our government holding their hand and continuously filling their hand from cradle to grave, it then becomes re-inforced for the next generation.

dl

dl, I really don't know that what you are saying is entirely accurate. I mostly agree with you, except that the idea of young people being irresponsible is not entirely new.

My husband is four years older than me. My parents (and a pretty good scholarship) paid for my college, and I graduated at age 20. My husband had a good scholarship and work study and some small student loans, which we worked hard and fast to pay back within our first few years of marriage while we had two incomes. When I got out of college, he had already been out for two years, working a 'real job', and saving money for things we would need. That's not to say that we didn't buy a few things on credit (like a no-interest-for-a-year dishwasher!) or our first car or two (which we paid off way early)... but we just never *liked* feeling indebted.

Even 25 years ago, we had peers who had credit cards and ended up way in over their heads. Student loan? I'll take out the max, even if I don't need it all for school expenses! etc.

I do agree that it feels more pervasive now, because there are so many gizmos and gadgets - from cell phones to laptops - that young people view as basic needs, and they over-commit financially to things like pricey cell phone plans because 'the phone was free!', etc. They see people with $400 designer purses and think those are 'basics'.

I live in a part of the US that has been largely insulated from the recession, so the people I see may have different 'issues' than where you are. We were identified recently as one of the 'happiest states', and it was because people around here get caught up in less of the hype you describe than they do in other areas of the country. We are fairly rural.

However...

25 years ago, I did have newly-married friends who were sucked into buying home decor items at craft fairs. Some got cars with payments that were too big. They shopped in nicer maternity stores than I did....

And....

When they wanted to buy a house, they found they did not qualify for a loan. For those who fell into that category, that really was something of a wake-up call. The credit cards were easy to get... but a mortgage was not.

And when they hit the phase where they REALLY wanted a house, they had to buck up, pay down the cards, and save up.

But in recent years, it wasn't that way. Those monumental 'bring 'em back to reality' items like houses were always attainable, because loans were given out willy-nilly. They could just keep skating on through their irresponsibility with no wake-up calls.