Q: I’m in loan modification hell. I have been trying since January to get a loan modification from my big box lender. At one point, the lender sent me a letter saying that I was prequalified for a loan modification. Now they say I don’t qualify for a loan modification. I don’t understand what’s going on with loan modifications in this country. I live in Arizona. My house payment is almost half of my income. My home is worth a fraction of what I paid several years ago. The story from my mortgage lender is always the same: I should call back in 45 days to check on the status of my loan modification. That seems like a long time to wait to hear about whether or not I qualify for a loan modification.

I have heard that people who hire an attorney are getting great results with loan modifications. I know a family who had several hundred thousand dollars of mortgage principal forgiven and he is a single man without the children and responsibilities that I have. Is hiring an attorney the only way to get cooperation? Do you know if my lender is helping anyone with loan modifications?

A: Although this is the first time I have heard from you, I hear from more than a hundred homeowners each week who are frustrated or fed up with the pace their mortgage lender has struck with their loan modifications. It seems as though everyone is on the slow track.

My sense is that mortgage lenders do not have the capacity to provide good customer service to the massive number of borrowers looking for financial assistance. Admittedly, mortgage lenders have had to invent their loan modification departments from the ground up, with a program that didn’t go into effect until April and has changed significantly since them. Getting enough team members in place and up to speed with the correct technology has been a slow process that has hindered the numbers of loans being modified.

Even so, it would be nice to think that lenders can move a little faster, particularly when some of the biggest mortgage lenders have also received billions of dollars in financing from Uncle Sam.

What can you do to speed up your own loan modification?

One thing to do is to contact a HUD housing counselor. You can also call the toll-free Homeowners for Hope Hotline at 888-995-HOPE. The folks who answer the phone are also HUD housing counselors and they will use a backdoor channel to get someone from your big box lender on the phone to do a quick evaluation.

But even if you do qualify for a loan modiication, it is taking months for loan modifications to happen. You’ll have to be patient, but not not a doormat.

I personally don’t think you should wait 45 days before contacting your loan servicer. You should call every few days so that they know you are serious and that you won’t let it go. (You’ve heard the cliche: the squeaky wheel gets the oil.) If you get someone on the phone who isn’t well-trained, hang up and try again. Some of the luck is just getting someone on the phone who knows what to do.

Attorneys and others who charge you upfront for so-called loan modification services often don’t do anything but cash your check. Loan modification scams are on the rise and I would be skeptical of anyone who says they can do something for you that you can’t do yourself. What I have heard from my highly-placed sources at the Treasury Dept. is that attorneys can’t do anything for you other than fill out the forms. But my sources say that the forms are easy enough that almost everyone should be able to do it themselves.

If cash is so tight that you can’t make your mortgage payments, you probably shouldn’t spend $1,000 or more to do something you can do for yourself, for free. If you’re confused by the information the lender is requiring, contact a HUD housing counselor. If you want to get an idea of the paperwork you’ll need, there is a list of documentation you should have ready on the MakingHomeAffordable.gov website. I suggest you begin to gather all of that information so that when you’re asked for it, you’re ready.

Finally, it’s possible that for some reason you may not qualify for a loan modification. If that’s the case, then you need to think about a Plan B, which might include walking away from your home and starting over elsewhere.

Loan Modification Resources

Find a local HUD office

Homeowners for HOPE Hotline: (888) 995-HOPE


Making Home Affordable Mortgage Modification

Barney Frank Says Bankruptcy Modification of Mortgages Possible if More Loan Modifications Aren’t Done

Mortgage Loan Modifications: Do You Have to be Late to Qualify?

Loan Modification Can Lower Your Monthly Mortgage Payment with a Willing Lender