Loan Modification Hell

6 Things To Do If You’re In Loan Modification Hell

On a recent conference call with journalists, Jack Schakett, a Credit Loss Mitigation Strategies Executive with Bank of America, outlined six things consumers can do if they are in loan modification hell that may help smooth out the process. The company acknowledged that the process has been difficult, and that consumers are confused and frustrated. New innovations in technology and servicing software have been designed to help.

In the meantime, if you’re trying to get a loan modified, you should try these six tips to make the loan modification process easier:

1. Call the mortgage loan servicer at off-peak times. Off-peak includes evening in the Eastern Time Zone and late afternoon in the Pacific Time Zone.

2. Prepare documentation in advance. It’s fairly easy to get into a trial loan modification, but the mortgage loan servicer is going to have to fully underwrite the loan before the trial loan modification can be made permanent. That means you’ll have to submit tax information, and documents that show how much you earn, how much money you have in the bank, and other information necessary for the mortgage loan servicer to figure out whether you can afford the loan.

3. Make the trial modification payments on time. It seems as though this should be intuitive, but apparently many people don’t realize that you need to have made at least three trial loan modification payments on time before your trial loan modification becomes permanent. If you miss a trial loan modification payment, or pay it late, you could be kicked out of the program.

4. Complete paperwork accurately. Bank of America says that many homeowners are not sending in completed paperwork or are not completing documentation correctly. Homeowners say lenders are losing documents. Your best bet is to scan in your documentation to the computer so you can email it to the lender over and over again. Also, make sure you get a list in writing from the mortgage loan servicer on the documentation that is required for the trial loan modification.

5. Be aware of the many foreclosure relief scams and wary of anyone asking for upfront fees in order to provide foreclosure assistance. None of the big banks are changing for trial loan modifications through the HAMP program. That said, you might be charged for other types of modifications or refinancings. In any case, no one can speed up a trial loan modification other than you and the lender. It is NOT worth paying anyone any amount of cash to do this for you. You can do it yourself.

6. Never make a mortgage payment to anyone other than the mortgage loan servicer. It seems obvious, but many companies claiming to be able to help you get a loan modification will attempt to put themselves in between you and the lender. That’s dangerous because if you don’t make your monthly payments, you’ll fall farther and farther behind and may become ineligible for a HAMP modification.

Bank of America has a home loan assistance website that can also provide a great resource for borrowers.

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Other titles that may interest you include:

Last Ditch Efforts: What To Do IF Your House STILL Hasn’t Sold

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17 Things To Know About Fixing Your Credit