What we ALL knew to be true is now in print. How many short sale clients told you this same story???
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What we ALL knew to be true is now in print. How many short sale clients told you this same story???
You need to be a member of Short Sale Superstars to add comments!
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We all need to learn the rules of loan modifications. If a homeowner makes all of his trial loan modification payments on time, the bank is still not required to do a permanent modification. If it is in the best interest of the bank to foreclose, they will foreclose. We need to understyand that the banks view these people as high risk, yes, not paying your mortgage will make you look high risk. I know it sucks, but banks are in the business of loaning money, not helping borrowers that haven't paid in five years. And yes, the bank employess do get paid bonuses. They don't get paid bonuses for not giving permanent modifications, but they get bonuses for submitting applications into the trial loan modification program. Our tax money pays millions of dollars to these banks for starting them in the trial loan program, where less than 10% will receive a permanent loan modification. Getting a "good" loan modification is like hitting the jackpot. As Realtors, we all need to learn HARP and teach homeowners in default! Once you learn how trial loan mods work, you will understand that 90% of the people that are doing trial loan mods should be short selling.
What about those that do not want to go into default? They have been making their payments, but have a true hardship, such as one spouse losing their job, and are hoping they can modify their loan, but to do so, they are at the mercy of the bank. If you have an FHA loan you have to be two months behind. Talk about Risk! Would I be willing to put myself in that kind of risk? I don't play the lottery, and I sure would not want to risk my home trying to win the jackpot with the bank.
A mortgage servicer will only modify a loan if it is to the advantage of the invester. It doesn't matter what the hardship is, what their situation is, or how good of people they are. The bank wrote them off as dead when they first defaulted and the bank is going to use the trial loan modification to squeeze as much money out of them while they are being foreclosed on. If it turns out the homeowners qualify for the loan mod and the terms are favorable for the bank, cha-ching, they have a loan mod.
Most of my short sales that I have done for my clients have been from this very scenario. They would try to get a loan mod, only to find out that they are required to miss two payments before the bank would be willing to look at doing a loan mod with them. Of course there were all kinds of reasons why they were either denied or the process would just lag and nothing be done. It is a shame that they had to lose their homes, but I am thankful that I was able to at least help them avoid foreclosure.
2 years ago, my husband lost his job of 21 years. We thought, well we should try to get a loan modification. We were told by B of A the very same thing as many of my short sale clients, we must miss two payments. We missed one, and I just had this bad feeling in my gut, that we were going to be denied, and that we would end up losing our home. We quickly made our payment, and decided not to go for the loan mod. Thank God!
before making any decisions or applying alwys ask for the definition of hardship under the loan mod program.
Loss of employment that places one in a state where they cannot meet all thier bills anbd payments monthly is usually included in the definition...
Once you have the definitions and rules regarding eligibility then it makes it easier to enforce them with the holder/agent involved.
Many here have given the regulations and rules as much as is known. Document everything well always...
Dirk, seems none of that matters really. Their best trick is to approve the trial mod, the owner makes the payments fully and on time, then BofA says the loan mod has been denied....and if they don't repay the difference b/t the old payment and the modified trial payment, they get foreclosed on.
My point is that the holder take funds from the fed for the modification, even if trial. Which means that the bank is in CONTRACT with both the borrower and the government. If hte bank violates the approval process they have violated two contracts and were "not in good faith".
Remember that IF an agent can quote the requirements and if the borrower can show they met them and that they performed under the trial...there may be many types of repurcussion in FC court and with the feds (CoC?). Including inability to gain any deficiency at all!
Best interest of the client is that the agent knows all of this and can help document it for the borrower's benefit later.
From the descriptions given, the holder is using the federal program to gain time and determine which houses will make them more with FC. This is itself a "not in good faith" action. Hard to prove....except that a 90% failure against those that apply is very heavy...especially if those that perform the mod and are denied after proving they can perform....this stat needs to be looked at carefully!.
There are times I have determined some qualification requirements for a client and suggested that they will not qualify and to NOT apply...this can be done by DEMANDING that certain qualifying questions be asked and aswered BEFORE the hard application (especially disqualifiers like under employment). If the client does not meet requirements in accordance with the answers given, then have them write a letter stating that the agent has already explained that they don't qualify for the mod program. That ends the low pay cycle and catch up harming the client credit or making it worse. IT can also help with extending possible other options and move them to SS much quicker.
Right on the money Wendy. 90% or more will get denied and be in a worse position than when they started the trial loan mod. I keep hearing of agents that won't approach a homeowner that is doing a trial loan mod. That is the homeowners that need to be contacted!!!! There are lots of listings out there with trial loan mod homeowners.
I could not find the article associated with the Huffington Post link, but I did find it on the following link: http://mydebtrelease.com/debt-news/bank-of-america-fraud-exposed
This is surely the reason for our nightmares. Also, I know a few clients who were denied modification even though they paid on time during the three months trial period. Those employees must have gotten a pretty big bonus.....
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