Home Affordable Modification Program (HAMP) Outline
Photo by Michael Mulligan
Below I have reproduced an outline done by my colleague, O. Max Gardner, on the Home Affordable Modification Program. As usual, Max has done a great job at distilling important information. I hope you find it useful.
The HAMP and HARP Programs
O. Max Gardner III
PO Box 1000
Shelby NC 28150
April 27, 2009
Home Affordable Modification Program (HAMP):
General Eligibility:
The eligibility limitation to Fannie/Freddie loans is only on the refinancing program (HARP), not the modification program. HAMP will apply to all mortgages originated before January 1, 2009. No loans originated after that date will be eligible. New borrowers will be accepted until December 31, 2012. Program payments will be made for up to five years after the date of entry into the HAMP. Monitoring, however, will continue for the life of the loan.
General Qualification Terms:
- 1. The home must be owner-occupied, single family 1 to 4 unit property (including condominium, cooperative, and manufactured home affixed to a foundation and treated as real property under current state law).
- 2. The home must be the primary residence (verified by tax return, credit report, and other documentation such as utility bills).
- 3. The home may not be investor-owned.
- 4. The home may not be vacant or condemned.
- 5. Borrowers in a current bankruptcy case are not automatically eliminated from consideration for HAMP.
- 6. Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving any legal rights.
- 7. First lien loans must have an unpaid principal balance (prior to capitalization of the arrears) equal to less than:
- a. 1 Unit—$729,750
- b. 2 Units–$934,200
- c. 3 Units–$1,129,250
- d. 4 Units–$1,403,400
Pending Foreclosures:
Any foreclosure action will be temporarily suspended during the trial HAMP period, or while borrowers are considered for alternative foreclosure prevention options. In the event that HAMP or the alternative foreclosure prevention options fail, the foreclosure action may be resumed.
For HAMP borrowers, there is no minimum or maximum Loan to Value (LTV) ratio for eligibility purposes. Borrowers, however, can only exercise one modification of their mortgage under HAMP. If the HAMP modification fails, then there are no additional HAMP options.
Debt to Income Ratios:
Front-End DTI is the ratio of the Principal, Interest, Taxes and Insurance Payments (PITIA) to the Monthly Gross Income. PITIA is defined under the program as principal, interest, taxes, insurance (including homeowners insurance and hazard and flood insurance) and homeowners association and condominium fees. Mortgage insurance premiums (PMI Insurance) are excluded from the PITIA calculation.
The Front-End DTI Target is 31%. The Standard Waterfall step that results in a Front-End DTI closest to 41%, without going below 31%, will satisfy the Front-End DTI Target. There is no restriction on reducing Front-End DTI below 31%, but any portion of the reduction below 31% will not be covered by the Payment Reduction Cost Share offered by the Treasury.
Home Valuations:
The Servicer may use, at its discretion, either one of the government sponsored enterprises’ (GSEs) automated valuation models (AVM)-provided that the AVM Renders a reliable confidence score-or a Broker Price Opinion to determine the Property Value for the DTI Test.
As an alternative, the servicer may rely on the AVM it uses internally provided that (I) the servicer is subject to supervision by a Federal regulatory agency, (ii) the servicer’s primary Federal regulatory agency has reviewed the model and/or its validation and (iii) the AVM renders a reliable confidence score.
If the GSE or servicer AVM is unable to render a value with a reliable confidence score, the servicer must obtain an assessment of the property value utilizing a property valuation method acceptable to the servicer’s Federal regulatory agency, e.g., in accordance with the Interagency Appraisal and Evaluation Guidelines (as though such guidelines apply to loan modifications, or a Broker Price Opinion (BPO).
In all cases the property valuation may not be more than 60 days old.
Verification of Income:
The borrower’s income will be verified by requiring a signed Form 4506-T (Request for Transcript of Tax Return) and obtaining the most recent tax return on file for each borrower on the note. For wage earners, the two most recent pay stubs for each wage earner on the note will also be required. For self-employed borrowers or for non-wage income borrowers, the borrower’s income will be verified by obtaining other third-party documents that provide reasonably reliable evidence of income. Borrowers must also represent and warrant that they do not have sufficient liquid assets to make their monthly mortgage payments.
Monthly Gross Income:
The borrower’s Monthly Gross Income (MGI) is the amount before any payroll deductions and includes wages and salaries, overtime pay, commissions, fees, tips, bonuses, housing allowances, other compensation for personal services, Social Security payments, including Social Security received by adults on behalf of minors or by minors intended for their own support, annuities, insurance policies, retirement funds, pensions, disability or death benefits, unemployment benefits, rental income and any other income.
Monthly Net Income (MNI) can be used for preliminary screening and qualifications. If used, the servicer will need to multiply net income by 1.25 to get an estimate of Monthly Gross Income (MGI).
Back-End DTI:
The Back-End DTI is the ratio of the borrowers’ total monthly debt payments (such as Front-End PITIA, any mortgage insurance premiums, payments on all installment debts, monthly payments on all junior liens or mortgages, alimony, car lease payments, aggregate negative net rental income from all investment properties owned, and monthly mortgage payments for second homes) to the borrower’s MGI. The servicer must validate each monthly installment payment, revolving debt and secondary mortgage debt by pulling a credit report for each borrower or a joint report for a married couple. The servicer must also consider information obtained from the borrower orally or in writing concerning incremental monthly obligations.
Borrowers who otherwise qualify for the modification under this program, but who would have a post-modification Back-End DTI greater than or equal to 55%, will be provided with a letter stating that they are required to work with a HUD-approved counselor and the modification will not take effect until they provide a signed statement indicating that they will obtain such counseling.
Reasonably Foreseeable/Imminent Default:
Every potentially eligible borrower who calls or writes in to their servicer in reference to a modification must be screened for a hardship. This screen must ascertain whether the borrower has had a change in circumstances that causes financial hardship, or is facing a recent or imminent increase in the mortgage payment that is likely to create a financial hardship (e.g., payment rate shock). If the borrower reports a material change in circumstances, the servicer must ask about current income and assets, and current expenses as well as the specific circumstances relating to the claimed financial hardship. Each of these elements shall be verified through documentation.
If the servicer determines that that a non-defaulted borrower is facing a financial hardship is in Imminent Default and will be unable to make his or her mortgage payment in the immediate future, the servicer must apply the NPV Test.
The NPV Test:
A Standard NPV Test will be required for each loan that is in Imminent Default or is at least 60 days delinquent under the MBA delinquency calculation. This NPV Test will compare the net present value (NPV) of the cash flows expected from a modification to the net present value of cash flows expected in the absence of a modification. If the NPV of the modification scenario is greater, the NPV result is deemed positive.
The NPV Test applies to the Standard Waterfall only and does not require consideration of principal forgiveness. However, the servicer may choose to forgive principal if the servicer determines that principal forgiveness improves the likelihood of loan performance and the value of the modification. Required parameters for the NPV Test will be published in a few weeks.
If the NPV Test generates a positive result when applying the Standard Waterfall, the servicer is required to offer a HAMP to the borrower. If the NPV Test generates a negative result, modification is optional, unless prohibited by the service contracts. The monthly payment reduction incentive is available for any HAMP, whether or not NPV is positive, that meets the eligibility requirements and is performed according to the Waterfall described below.
If the NPV Test result is negative and a HAMP is not pursued, the lender/investor must seek other foreclosure prevention alternatives, including alternative modification programs, deed-in-lieu and short sale programs.
Loan Modification and Standard Waterfall:
Servicers will follow the Standard Waterfall described below to reduce the monthly payments to 31% Front-End DTI Target defined below. The initiative will reimburse lenders/investors for one half of the costs of reducing monthly mortgage payments from a level consistent with a 38% Front-End DTI Ratio (or less, if the unmodified DTI is less than 38%) down to a level consistent with a 31% Front-End DTI Ratio. This Payment Reduction Cost Share can last for up to five years from the HAMP modification effective date.
HARP Program:
Services will be required to consider a borrower for refinancing into the HARP Program when feasible. Servicer incentive payments will be paid for HARP refinances.
If the underwriting process for a HARP refinance would delay eligible borrowers from receiving a HAMP offer, servicers will use the Standard Waterfall to begin the HAMP process and work to complete the HARP refinance during the Trial Modification Period.
Consideration for HARP should not delay eligible borrowers from receiving a HAMP offer and beginning the Trial Modification Period.
The Standard Waterfall Process:
- 1. Request MGI from borrower.
- 2. Validate total first lien debt and monthly payments (PITIA). For purposes of making a provisional modification offer during the Trial Modification Period, the borrower’s unverified income and debt payments can be used. Provisional information and modification terms will be verified in a timely manner.
- 3. Capitalize the arrearage. Servicers may capitalize the accrued interest, past due real estate taxes and insurance premiums, delinquency charges paid to third parties in the ordinary course of servicing and not retained by the servicer, any required escrow advances already paid by the servicer and any required escrow advances by the servicer that are currently due and will be paid by the servicer during the Trial Period. Late fees are NOT capitalized.
- 4. Target a Front-End DTI of 31%. The lender/investor shall follow steps 5, 6 and 7 below to reduce the borrower’s payment to the level corresponding to the Front-End DTI Target.
- 5. Reduce the contract interest rate to reach the Front-End DTI Target (subject to an interest floor of no less than 2%). The note rate should be reduced in increments of 0.125%, and should begin the monthly payment as close as possible to the Front-End DTI Target without going below 31%. If the resulting modified interest rate is at or above the Interest Rate Cap, this modified interest rate will be the new note rate for the remaining term of the mortgage loan. If the resulting modified interest rate is below the Interest Rate Cap, this modified interest rate will be in effect for the first five years, followed by annual increases of 1% (100 basis points) per year or such lesser amount as may be needed until the interest rate reaches the Interest Rate Cap, at which time it will be a fixed mortgage rate for the remaining loan term.
- 6. If the Front-End DTI Target has not been reached, extend the loan term of the loan up to 40 years. If term extension is not permitted, then extend amortization. The 40-year term begins at the start of the modification (after the borrower completes the Trial Period). Note that the servicer should only extend to a term that is necessary to reach the Front-End DTI Target; there is no requirement to extend to a 40-year term.
- 7. If the Front-End DTI Target has not been reached, forbear principal. If there is a principal forbearance amount, a balloon payment of that forbearance amount is due on the maturity date, upon sale of the property, or upon payment of the interest bearing balance. If the modification does not pass the NPV Test and the servicer chooses to modify the loan, the modified balance must be no lower than the current property value.
Principal Reduction Option:
There is no requirement to use principal reduction under HAMP: however, servicers may forgive principal to achieve the Front-End DTI Target.
Principal forgiveness can be used on a standalone basis or before any step in the Standards Waterfall process. If principal forgiveness is used, subsequent steps in the Standard Waterfall may not be skipped. If principal is forgiven and the rate is not reduced, the rate will be frozen at its existing level and treated as a modified rate for the purposes of the Interest Rate Cap.
In the event of principal forgiveness, the Repayment Reduction Cost Share continues to be based on the change in the borrower’s monthly payment from 38% to 31% Front-End DTI Ratio and is limited to five years.
Modification Terms:
Interest Rate Floor: THE IRF for modified loans is 2%.
Interest Rate Cap: The modified interest rate must remain in place for five years, after which time the interest rate will be gradually increased by 1% (100 basis points) per year or such lesser amount as may be needed until it reaches the IRC. The IRC for a modified loan is the lesser of the fully indexed and fully amortizing original contract rate or the Freddie Mac Primary Mortgage Market Survey rate for 30-year fixed rate conforming mortgage loans, rounded to the nearest 0.125%, as of the date that the modification document is prepared. If the modified rate exceeds the Freddie Mac Primary Mortgage Market Survey rate in effect on the date the modification document is prepared, the modified rate will be the new note rate for the remaining loan term.
Principal Forbearance: No interest will accrue on the forbearance amount. If the option to forbear principal is selected, the servicer shall forbear on collection the deferred portion of the Capitalized Balance until the earlier of the maturity of the modified loan, the sale of the property, or the pay-off or refinancing of the loan.
Redefaulting Loans: A loan will be considered to have redefaulted when the borrower reaches a 90-day delinquency status under the MBAS delinquency calculation. Redefaulting Loans will be terminated from the program, and no further payments of any kind will be made to the lender/investor, servicer, or borrower. Redefaulting Loans should be considered for other loss mitigation programs prior to being referred to foreclosure.
Trial Period Required. Successful completion of the Trial Modification Period and entry into program agreements between the Servicer and the Treasury’s financial agent are prerequisites for any payments to the lender/investor, servicer or borrower.
Modification is effective on the first calendar month following the successful completion of the Trial Period. Successful completion means that the borrower is current (under the MBA delinquency calculation) at the end of the Trial Period.
Borrowers in foreclosure restart states will be considered to have failed the Trial Period if they are not current at the time the foreclosure sale is scheduled.
No payments under the program to the lender/investor, servicer or borrower will be made during the Trial Period. No payments under the program to these parties will be made if the Trial Period is not completed successfully. NO payments under the program to these parties will be made unless and until the servicer has entered into the program agreements with the Treasury’s financial agent.
Length of Trial Period: The Trial Period will last for 90 days (three payments at modified terms) or longer if necessary to comply with investor contractual obligations in the Pooling and Servicing Agreements. The borrower must be current at the end of the Trial Period to obtain the HAMP modification.
Escrows: Servicers are required to escrow for modified borrowers’ real estate taxes and mortgage-related insurance payments immediately if they have the capability of processing these payments or are already using a third-party vendor for this purpose. Servicers who do not have this capacity must implement an escrow process within six months of the program agreement.
Counseling Requirements: For borrowers with a Back-End DTI of 55% or higher, the servicer must inform the borrower of the availability and advantages of counseling and provide a list of local HUD-approved counselors. The servicer must provide the borrower with a letter stating that counseling is a requirement of the modification terms. The letter may be required by counselors in order to begin counseling. The modification will not take effect until the borrower represents in writing that he or she will obtain counseling.
Assumable: If the solidified loan was assumable prior to modification, a HAMP modification cancels this feature.
Modification Fees: There are NO Modification fees or charges born by the borrower.
Reimbursable Fees and Charges: Modification fees and charges to the servicer will be reimbursable by the investor. These include notary fees, property valuation and other required fees. Servicer reimbursement by the investor will take place within the normal process between the servicer and the investor.
Unpaid Late Fees: Unpaid late fees will be waived for the borrower. These include late fees prior to the start of the Trial Period and accrued during the Trial Period.
Credit Report: The servicer will cover the cost of the credit report.
Servicer Compensation: Upon modification following a successful Trial Period, and contingent on signing the program servicer agreement, the servicer will receive an incentive fee of $1,000 for each eligible modification meeting HAMP guidelines. Servicers will also receive Pay for Success fees payable each 12 months for three years at $1,000 per year. Servicers will not receive Pay for Success fees for Redefaulting Loans. For loans modified while still current under the MBA delinquency calculation, the Servicer will receive a Current Borrower One-Time Incentive of $500 following successful completion of the Trial Period. Lenders that service their own (portfolio) loans are eligible for these incentives. The term servicer means the party that is responsible for performing the modification activities. Similar incentives will be paid under the HARP Program.
Borrower Cash Contributions: The investor may not require the borrower to contribute cash for eligibility or execution of a Trial or Permanent modification.
Lender/Investor Compensation: Lenders/investors will be compensated only in the event that the Front-End DTI Target or a lower Front-End DTI is achieved. Lenders/investors will follow the Standard Waterfall specified above to reach a monthly payment that satisfies the Front-End DTI Target. As described above, Treasury will provide compensation based on one half of the dollar difference between the monthly payment for a 31% Front-End DTI Ratio and the lesser of (i) the monthly payment for a 38% Front-End DTI Ratio or (ii) the borrower’s current monthly payment. This compensation will be provided for up to five years or until the loan is paid off.
Upon a modification becoming effective following successful completion of the Trial Period by a borrower who was current prior to the start of the Trial Period, lenders/investors will be paid a $1,500 Current Borrower One-Time Incentive, subject to certain de minimis constraints (discussed below). No monthly lender/investor payments will be made during the Trial Period. Monthly lender/investor payments will begin after the Trial Period is successfully completed, the servicer signs a service agreement with Treasury, and formal modification begins. No monthly lender/investor payments will be made if the Trial Period is not completed successfully.
Borrower Compensation: Borrowers will be eligible to accrue up to $1,000 each year in Pay-for-Performance Success Payments for up to five years, a total of up to $5,000 over five years, subject to certain de minimis constraints (discussed below). Accruals are based on on-time payment performance. The first annual principal balance reduction will be effective 12 months after entering the Trial Period as long as the borrower is not terminated from the program. In any given month, the borrower’s mortgage payment must be made on time, accounting for standard servicer grace periods, in order to accrue the monthly Pay for Performance Success Payment. The borrower will receive information on a monthly basis regarding the accrual of these payments.
The payment will be directed to the servicer, who will reduce the principal balance by the payment amount (but not by more than $1,000 per year) for five years if the borrower continues in the program. Payments are to be applied directly and entirely to reduce the principal balance, and any applicable prepayment penalties on partial principal prepayment made by the government must be waived. The equivalent of three months of Pay-for-Performance Success Payments will be made upon successful completion of the Trial Period, contingent upon the servicer signing a service agreement with the Treasury.
Borrowers who are terminated from the program lose their right to outstanding accruals.
De Minimis Constraint: To qualify for servicer Pay for Success payments and borrower Pay for Performance Success Payments, the modification must reduce the monthly payment by a minimum of 6 %. The monthly payment is the PITIA payment, as used in defining DTI, with the loan fully indexed and fully amortized.
When paid, servicer annual Pay for Success payments and borrower Pay for Performance Success Payments will be the lesser of (i) $1,000 or (ii) half the reduction in the borrower’s annualized monthly payment.
The de minimis constraint does not apply to the up-front Servicer Incentive Payment, the Payment Reduction Cost Share, or the Home Price Depreciation Reserve Payment.
Disclosure: When promoting or describing loan modifications, servicers should provide borrowers with information designed to help them understand the modification terms that are being offered and the modification process. Servicers also must provide borrowers with clear and understandable written information about the material terms, costs, and risks of the modified mortgage loan in a timely manner to enable borrowers to make informed decisions.
Fair Lending: Servicers’ modifications under this program must comply with the Equal Credit Opportunity Act and the Fair Housing Act, which prohibit discrimination on a prohibited basis in connection with mortgage transactions. Loan modification programs are subject to the fair lending laws, and servicers and lenders should ensure that they do not treat a borrower less favorably than other borrowers on grounds such as race, religion, national origin, sex, marital or familial status, age, handicap, or receipt of public assistance income in connection with any loan modification. These laws also prohibit redlining.
Consumer Inquiries and Complaints: Servicers should have procedures and systems in place to be able to respond to inquiries and complaints relating to loan modifications. Servicers should ensure that such inquiries and complaints are provided fair consideration, and timely and appropriate responses and resolution.
Home Price Depreciation Payments. To encourage lenders/investors to modify more mortgages, compensation will be provided to partially offset probable losses from home price declines. This will be structured as a simple cash payment on each modified loan while the loan remains active in the program.
Payments for Short Sales and Deeds-in-Lieu: Compensation will be provided to servicers and borrowers in order to facilitate short sales or deeds-in-lieu in those cases in which borrowers either fail the net present value (NPV) test (described above) or fail to qualify for, or default under, the modification program.
Second Line Elimination Payments: To reduce the borrower’s overall indebtedness and improve loan performance, additional incentives will be provided to extinguish junior liens on homes with first-lien loans that are modified under the program.
HARP:
The] Home Affordable Modification Program will offer assistance to as many as 7 to 9 million homeowners, making their mortgages more affordable and helping to prevent the destructive impact of foreclosures on families, communities and the national economy.
The Home Affordable Refinance Program will be available to 4 to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 80%. Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.
GSE lenders and servicers already have much of the borrower’s information on file, so documentation requirements are not likely to be burdensome. In addition, in some cases an appraisal will not be necessary. This flexibility will make the refinance quicker and less costly for both borrowers and lenders. The Home Affordable Refinance Program ends in June 2010.
| Example #1 Meet Brian and Lisa – They need to refinance their mortgageBrian and Lisa have steady jobs – Brian is a high school teacher, Lisa is a nurse. They pay their bills on time, including their monthly mortgage payment. Like many homeowners, Brian and Lisa are unable to refinance to a lower interest rate because the value of their home has declined.
Do Brian and Lisa qualify to refinance to a lower interest rate under the new plan? They may because they meet the following requirements:
Like Brian and Lisa, you may be able to refinance to take advantage of lower interest rates to reduce your mortgage payments. If so, here are the answers to some of the questions you may be asking. How do I know if I have a Fannie Mae or a Freddie Mac loan? How do I know if I am eligible? I have both a first and second mortgage. Do I still qualify to refinance under the program? Your eligibility will depend on whether you are able to make the new payments on the first mortgage. The lender on your second mortgage must agree to remain in the second position. Will refinancing lower my payments? What would my new interest rate be? Will refinancing reduce the amount that I owe on my loan? When can I apply? |
The 13 participating servicers (including affiliates) cover over 50% of the servicing market for prime, Alt-A and subprime, so there’s a good chance you’ll have coverage even if no other servicers participate, although it sounds as if others are in the process of signing up so this coverage should only increase. Whether they can get consistent application to their loans in the private-label deals is uncertain at this point.
| Name | Web Site | Phone |
| Aurora Loan Services LLC | https://myauroraloan.com/ | 1-800-550-0508 |
| Bank of America, N.A. | www.bankofamerica.com/mha/ | 1-800-846-2222 |
| Carrington Mortgage Services, LLC | www.carringtonms.com | 1-888-267-2417 |
| Chase Financial LLC | www.chase.com | 1-866-550-5705 |
| CitiMortgage, Inc. | www.mortgagehelp.citi.com | 1-866-915-9417 |
| Countrywide Home Loans Servicing LP | http://my.countrywide.com/media/hasp.html | 1-800-669-6607 |
| GMAC Mortgage LLC | www.gmacmortgage.com | 1-800-766-4622 |
| Green Tree Servicing LLC | www.gtservicing.com | 1-800-643-0202 |
| Home Loan Services, Inc. | www.viewmyloan.com | 1-800-622-5035 |
| Ocwen Financial Corporation, Inc. | www.ocwen.com | 1-800-746-2936 |
| Saxon Mortgage Services | www.saxononline.com | 1-800-594-8422 |
| Select Portfolio Servicing | www.spservicing.com | 1-888-818-6032 |
| Wells Fargo Bank, NA | www.wellsfargo.com/homeassist | 1-800-678-7986 |
| Wilshire Credit Corporation | https://www.wcc.ml.com | 1-888-502-0100 |
Related posts:
- Mortgage Modification Programs (Useful Program Links)
- Selling a House in Bankruptcy (Part Two: Ch. 13)
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Comments
Wow,
How very informative! Seems to be too good to be true.
We as with many are presently trying to proceed with the Home Affordable Modification Program.
Family Services, a non profit HUD organization is “trying” to handle it, although, Chase Home Loans is blowing up our phone with all kinds of threats. Are they cooperating with Family Services? We can’t seem to get a straight answer from anyone!! In the meantime, We wait, until we hear from someone, while we fall behind now on our second month. ??
Great Article, really help me out in understanding the pros and cons of the program.
Hang in there Linda, I know the feeling it is very stressful.
I am finding out from CITI that if your property is worth more than you owe- you will not qualify period> Is that true????
Great article. I am currently negotiating with my lender and the info you have outlined should help considerably.
Thank You
EXCELLENT Article!!!!!! It was very informative and helped me to better understand the process and the requirements.
Very informative article. Seems to be a straight forward process. I requested a modification with my lender INDY MAC and received one, however, it was not under the HAMP program. They have OK’d the submittal of my financials a gain for re- review under the HAMP program. I am patiently waiting.
Yes, good, easy reading stuff!! Here’s what I am going through, it’s good, I think. The beginning mod. process is:: for me anyway, should be the same for you!!
For Wachovia loans: I have the ‘Pick & Pay’. They started the HAMP mods. last Mon. The phone # is 1-888-565-1422. M-F 8am-10pm & Sat. 8am-5pm [central time in TX] I called last Mon. and waited one hour on hold. Ya gotta hang in there. You will be asked questions about everything, like income, bills, hardship, etc. So, before you call, get all these papers. Do a income/debt sheet on Works Task Launcher or your equivalent, you don’t need to send it but it’s easier to have it in front of you.. Be prepared to explain your problems that caused you to be delinquent, if you are. If not, you may not get help right now??? Copy everything so you will have it if ya need it. Keep originals! Then, in a couple days, you will get a packet, with instructions and questionners. You need to send last two Tax returns, any income docs; pertaining to you, if you have them. Sign and date the IRS Form 4506-T, and hardship letter [short and not desperate]. Hand write it and sign & date. Send it certified to make sure they get it and follow up with tracking. Lots of lost paperwork, I hear. I was told to mail mine, cuz they had alot of faxes. Now they do NOT accept faxes at all. They told me it would take up to 30 days for a response. So, now I wait. Hope this helps and just know that I have been working on this since April. I also read that if you owe less than your house is worth, you will get denied. That’s my case. Hope that’s not true??. Good luck people and wait some more. Linda
Oh, just found out today 11/8/09 that the Fed. guidelines are: for the bank to either send mod. papers or a denial within 10 days of receiving your paperwork. Don’t know about that yet.
Thank you, Good luck
I do not have a Freddie or a Fannie, always made my payments but then my work was poor for two years (Realtor) I have ASC as a servcing company who is owned by Wells Fargo. I just committed to sending them four months of double payments. I hope I am not going to get screwed in the end. Best thing that I can tell anyone is do NOT sit and wait, call them every single week and find out the status of your file. Every time I tried to do a loan modification they would tell me to wait for 2-3 weeks but I would call the next week only to find I had been denied. I submitted four times. By staying on top of them every week I was able to get answers. I finally accepted a really crappy deal but it was all I could get out of them to keep my house out of foreclosure. I’m eating beans for the next four months, lol, to pay them. Had I not called I would have been in foreclosure.
If you agree to the trial period and the modification your credit will be destroyed in a manner mandated by the HAMP program.
The trial payment is based upon stated income. If documented income exceeds 25% new trial period must start.
During the trial period you will be reported to all credit bureaus.
B of A declared my lenders report MAJOR DEROGITORY.
If after the trial period you do not qualify for a modification the bad credit report and low FICO Score remains.
HAMP requires all lenders to report you (if making the trial payment) current but on a modified plan because you are not paying the contract payment.
If you make the full contract payment during the 3 month trial (you could become not eligable per HAMP) … REDUCED TRIAL + DIFFERENCE = FULL CONTRACT PAYMENT… HAMP still requires you be reported to the credit bureau.
Standing by for the 6 to 8 million people to get bad credit.
Well, my credit was already destroyed by Discover bank.
I have gone through the wringer to save my roof and I’m not even sure if I have a HAMP modification, or if I do NOT have a HAMP modification. Litton Loan has told me both that it IS and that it is NOT a HAMP. But in any event, my payments are now $933.91 per month and that is a big improvement in terms of having money for other bills and costs.
That said, within days of sending me the FINAL agreement, they reflect two errors on their website, first that rather than having a 840.00 shortage in escrow, it suddenly became SIX THOUSAND and second, they NOW indicate I am REQUIRED to have flood insurance which is UNTRUE.
Still, if the above can get straightened out, I will be far better off than I was, and if credit is ruined, oh well, that IS how I got into this mess in the first place.
I went through the trial period, got the congratulations letter but found out that my bank had frozen my HELOC during this time because they reported me as delinquent on my first. At the end of the trial, I got a job but the bank said, oops,,,that changes everything. They re-calculated my new trial payment as 1000 more than the regular mortgage. I told them that that was crazy and they demanded all arrears mortgage payments and applied my trial payments to the loan. They still showed us as delinquent and now I can’t get any kind of loan to move my family to the state where I had to move to get work!!! I guess the Obama Administration didn’t figure anyone might get a job! Now I’m at a loss as to what to do. Should I just walk away from the house and let the bank get into the real estate business??
Jim, I would schedule a consult with a bankruptcy lawyer. He can go over all your options. What you do is heavily dependent on the facts of your case. I hope it works out well for you.
I was wondering WHO helps the borrower with the HAMP program? I emailed HAMP and was told that they are there for the lenders? I received my STEP 2 of the HAMP..after my 3 trial payments. We lost 1000.00 a month in income and our payment is only going down 200.00? Also my payment is above 31% of my pretax income? They also gave me a 27 year loan??? Never heard of it. When I called HomeQ Servicing I was told they just punch my numbers into a formula and thats what came out. I tried to inform them that the payment was 200.00 over my 31% pretax income. I was informed that they were the professionals not me? So who can I talk to about this? I also asked why I can’t have a 40 year loan…she said thats not what came out after punching thenumbers into the HAMP formula. I think the lenders are the only ones this program is helping. Does anyone know who I can contact and find out if my paperwork is right?
Michelle, You must either hire someone–like an attorney–or stay on it by yourself. What you are going through is not uncommon, unfortunately. Just keep good records and keep on the lender.
I have been working with bank of america / formely countrywide home loans witha HAMP modificaiton.. they extended the 3 month trial (which the payment are way over 31% gross income), I however have made all the trial payments in order to avoid foreclosure. I contacted bofa several times a week, if not several times a day.. to see if they needed any additional information from me. I also asked several time if they are calculating my income correct.
Well today i got my FINAL mod papers, and low and behold, my payment is still way over 31% gross income.
I called bofa immediatley, asked how they are calculating my income and why my payments are still so high.. first the told me that only the trial is based on 31% of your income, then the told me that because I have so much unpaid interst and fees that they had to add that into the loan, then she told me that my income is based on ALL of my gross income. My normal pay, and the rental income I recieve. I thought that you had to calculate rental income using 75% vacancy factor and then minus the piti equals the true income for the rental. they told me this is not correct that they base it strictly on 31% of ALL income.
I also happen to work for a Major mortgage company that is a partcipant in the HAMP program, and according to the guidelines from the treasury, the HAMP modification is 31% of gross income and calculates rental income factoring in the vacantcy factor.
I need to know if there is anything at this point i can do to have them re-look at my loan and modify it correctly based on the correct income calculations.
Countrywide / Bank of America is the worst people to talk to, you cant get thru to a negotiator, and obviously by the person i talked to today, they have NO idea what they are doing.
I am so very disappointed in this entire process.. and have about given up all home. As i can not afford the modification payment (even with my total rental income caluclated into my gross income at 31% is still less than what my “modified payment is”
Jackie,
I am sorry you are going through this. These companies, unfortunately, put little into loss mitigation. They fail to understand that it’s better bad to lose money, but losing more money is worse than losing less money. They are disorganized and understaffed. I would suggest you contact your Congressman and/or Senator. They may be able to apply some pressure. I wish you the best.
Hello, I’m writing to ask someone for info. Last March(2009) I was laid-off. As soon as this happened i contacted my mortgage company to see what to do. They informed me to make one more mortgage payment then they would send me some papers to file for the hope program(Maine). They informed me i would qualify for the program and this program pays 4months mortgage. Meaning i wouldn’t have to pay until Aug 09. It took them months to get the paperwork to me then months to hear back from them. So around Aug. I get the info that i do not qualify for the program and i am now 4months behind on my mortgage w/only one mortgage payment to give them and this is not enough for them so they won’t take it. Also My i owe more on the house then it is worth so i don’t qualify. then i did a lost mitigation package and they wouldn’t help me they want 4thousand upfront, which i only have 2 and they wouldn’t except, so i’m stuck. They haven’t foreclosed yet but will soon. Where do i go from here?????????
Jason, call a local bankruptcy attorney to explore a Chapter 13. You can cure the arrearage in a 13. This may or may not work, but you should explore it. See my bankruptcy site: http://www.scbankruptcyattorney.com.
Can a Fannie Freddie loan be HAMP’ed? Or do I have to go through HARP? I’m really confused.
Won’t the “insurance” that Fannie Freddie provides to the lender ALWAYS make foreclosure a better NPV yield than a mod?
Very Good Info I found you thru Google. Thanks for posting.
I am a 20 year Mortgage Broker/Banker who has been helping clients that cannot refi, and have a hardship with gaining a loan mod. I also do a weekly radio show out of Boca Raton Fl and the majority of our callers are irate, confused, flustered, amongst many other things about how their lender is handling the mod or lack of. I strongly agree with getting a knowledgable third party involved. We work with a both a large law firm and many local attorneys in South FL that specialize in foreclosure defense, BK, & Loss Mitigation.
If a client comes to us that is not in foreclosure, we will help process their file, but if they are in any stage of foreclosure we will immediately refer to our attorneys or work with their attorney assisting as a third party processor.
This is a relatively new business, but in the last 24 months we have completed over 100 modifications, both thru the Fed program and thru the lenders own programs.
There is no quick fix or easy answer. Do not let your lender tell you that you have to be behind to get help, about 1/3 of my clients, including my own family were not behind when we obtained their mods.
I would like to mention that less than 10% of homeowners that are in foreclosure in Florida retain an attorney to represent them. I do not know the Nat’l numbers, but they are probably just as bad.
When most purchase the largest investment in their lives, (their home) many use an attorney. Why not hire one to represent you in the retention of it? Find out your options. The lenders certainly have their legal team.
My take on this is; the MHA Program is not working, nor will it work until it addresses principal reduction. We have many homeowners tell us they don’t care if the bank drops the rate to 1%, they will never break even; they are so upside down or far bahind on their mortgage. The Banks/Servicers need a reality check.
Look at the dot com bust of 2000, folks bailed on stocks at almost any price as they tried to keep what was left. Real estate is currently no different . People are getting more savvy; why continue to throw good $$$ after bad if the lender won’t work with you. TELL your lender that.
There is hope for those seeking a loan mod, BE PERSISTANT. Keep working your way up the food chain when you get thru. Ask for a supervisor if needed. Write down everyones name/employee ID #/emails/Fax #’s. Keep a journal as if you will have to defend yourself in court. Be prepared when you call in, get your homes value upfront, remind the lender how much negative equity you have, tell them you tried to refi, but got turned down, have your financials in order; just like when you first applied for a loan.
Knowledge is power, be on top of income/assets. Let them know you mean business. If Self Employed; have a current P/L ready. Work with your CPA on this.
With over 500,000 requests per month; lenders are losing everything, not following up and many who you speak with either don’t care or don’t know what they are talking about. Some do, and when you do get that person on the phone, show your gratitude and sincerely ask for help. If you get an idiot or uncaring employee, hang-up and call back. If they transfer you to a 3rd world country and you can’t understand who the heck you are speaking to, DEMAND they transfer you back to the States! We do this daily. There is no magic formula. Remember the squeaky wheel gets the oil, keep squeeking til they hear you! Don’t leave it up to the Fed to fix this, many of them could probably use the program themselves, and still wouldn’t qualify.
We’re Americans, we are very intelligent and we’ll get ourselves out of this.
If it was easy this would have never happened. Hang Tough, BE PERSISTANT, demand what you know to be right, not what they tell you their computer says!
If we have been making our payments within the 30 day timeframe AND we do get approved for the trial period how will this impact our credit? I understand that it will, but how many points difference are we looking at? And, over the course of say two years…will it get better?
I understand that a short sale will impact us for two years…but if a loan mod impacts us longer, then I can’t see why a loan mod would benefit us.
Your advice is appreciated.
[...] by Linda D. Evans on May 29, 2009 @ 9:20 amWow, How very informative! Seems to be too good to be true. We as with many are presently trying to [...]
I have an FHA loan with Wells Fargo been trying to workout a loan mod with them for months now. Very stubborn people to work with. Managed to talk to them today, said my mod was denied for HAMP but gave me an alternative mod whereby my new payments would be the same as before. Beats the purpose of a mod. Is it true that FHA loans do not qualify for HAMP ????
After 15 long months we finally got approved under the HAMP last Friday Feb 26th for a 3% 30 year fixed with Wells Fargo /loan owned by BoA- we were so excited & relieved after sooooooo long. On Monday March 1st we got a call going over our new reduced payments and set-up of our escrow account and when our new loan would be in affect (April 1st) etc before going up for final u/w review approval. We were told then that they would call back next day….which of-course they didn’t…..I left them alone for 3 days as I’ve been through this for so long and finally called them Friday March 5th to be told that we have now been DENIED!…..Denied What by who?????? They/ WF told me BoA has denied us…. Then I get some febble excuse from the WF chap that our loan is owned by BoA….like they didn’t know?????
I have reviewed the parrameters of the HAMP program- we are own occupied 3 units with neg loan debt of 1.1M…..all other guildlines we qualify for…..What do you suggest I do at this point besides blow-up BoA the biggest B******s of them all…..they are making money on Short sales so they don’t give a darn….why can’t this be stopped? Making 80% on the loses is crazy…..how are we ever going to recover when the crocks are still working it?
Please advise
Wendy
what about a home that had to be rented out so that the payments could be made so that monthy payment could be made to the bank. Homeowner lives with parents until they could get back to their home and not have to rent it to make the payments. the home is in florida.
Wendy,
Thanks for your comment. I don’t know what to tell you, except I hear this all the time. I would suggest calling your Congressman. They know this program is a failure. We need something mandatory. I wish you the best.
In the beginning of the year there was so much hype around all the temporary mods that were getting allowed by the banks. Those should be coming off their 3-6 month forebearance periods soon. Are any of these getting approved for permanent mods?
Financial Hardship
I am having problems modification my loan, due to “2009″ bankruptcy not discharged. The Lender will not work with us. The hardship was due to 8/2009, our family owed business had to close due to economic financial hardship of our community. My spouse is retired and myself now have a pending approval for disability. We do not qualify for rental apartments, and can not afford to move. Please tell us what to do? Is there a assistance program for seniors who want to keep their homes?
Marion & Gloria Brooks
(623)872-2768
Most I see are temporary. But I see so few working in any capacity that I can’t answer your question.
According to government guidelines, your bankruptcy should not stop you from getting a modification. You should discuss this with your bankruptcy attorney or other attorney in your area.
QUESTION: I just want it confirm that when you apply for HAMP program. Someone told me that you have to be with the
bank at least one year before you could apply for HAMP ?
IS THIS RIGHT ?
Thanks
pat
First I would like to say that the article was very well writen and most important easy to understand. Kudoos for a job well done. However, like most of the commenters here I have experienced most of the modification set backs if not all. I have been at this since last Feb.26, 2009. Not until recently have I seen any progress. Then in Jan. 2010 I started to get messages from Wells, and have been able to go to http://www.wellsfargo.com/assist to check on the status/progress of my modification. All I can say that after 13 months the progress is nothing short of miraculous and many, many prayers interceeding on my behalf. Many days I felt like I was loosing my mind (literally) my health has declined over the past 3 yrs. We also filed for BK Jan. 2009 which was a major problem and hold up of any modification assistance. There were so many calls that ended very fustrating with GREAT conflicting infor. given. 1st we were not ellgible b/c we were in a non discharged BK (now this truly was nightmarish) to say the very least. Looking back and making sense of all that has happened that the hold ups and set backs were occuring for my good, as the HAMP program has been modified (for the best) over the implementation of the program last spring 2009. I must say that when things look their bleakest hang in there and know that things may be delayed for your ultimate good. I say this without my own modification not been complete. Hey the trial period has not even begun. I don’t even know the payments that we will rec. but I do know that the site does say that my document review has been completed and a preparation for a mod. is in the works. Just today I got home and opened my screen door only for a sliver if paper to fall beside my feet. Lo and behold it stated that a representative had been to my home earlier to take a photo of the front of my home. Though my faith is strong, I am very aware of the general steps whereas someone comes to your home to photo only the front. Can we say, 1 a generic appraisal, or 2 for a foreclosure listing w/a pic. of the front of the home. I became a little concerned after quickly thinking of the aforementioned. However, at the very bottom of the sliver it stated that they were in no way attempting to collect a debt, which did put my mind at great ease, as for a foreclosure listing would definitely be in an effort to collect a debt. It also stated my loan# and strongly urged me to call a WF rep to discuss the matter further. Can we say I did so immediately. The rep. surprinsingly was more knowlegeable than I guess I can say for any of the others. Her response though generic, did explain why a photo had been taken of the front of my home (to ensure, that the borrower (me) had not abandoned the home and that it still had the apperance of being lived in. She stated that if I had been home that the evaluator would have asked to come in and take a pic. or 2 for file reference. However, since I was not a pic. of the front was sufficient. I did read above this could be the case in the event that an AVM did not yield a value of confidence, which I know factually that the AVM could not have. My home is 1 of 2 w/a value of over 200k in my community. Al of the other residents are retired teachers, nurses…actually mostly teachers who actually taught me in highschool. So these seniors are 70-80 yrs old. There dream was long paid for. I exp in my hardship letter that to foreclose on my home would not only add to the national problems, but more imp. in my opinion it would drastically drop the values of the home of these seniors who have long paid their home loans off. Also that my home was not located in an area that would make for an easy sale, since it was on the mkt 6 yrs. prior to our purchasing the home. Which by the way the owner was a co-worker of mine, and this was by divine intervention that the sale even occured. I know that I had to have stressed the nerves of the processor/negotiator who has been working my file as I submitted a 3pg. hardship letter. Well! They wanted to know what caused the hardship, and potential changes in income, the affects that a FC would have on my comm….so I gave it to them in a short story after advising them, that reading the entire story would be of the utmost importance in deciding the qualification of a loan mod. to fail short of fully reading could result in non-favorable results not only for WF first and foremost, but also nationally speaking, and concern for my comm. and 10 miles out since our property has been used for comparison sake for the appraisals of other homes. Not to mention that this home was not one of an investors dream, as anyone who could or would be willing to purchase this home with the many other neg. factors would potentially be none or perhaps 1 hopefully! Well they have listened after 13 months, and 10 or more document updates, letters from the BK staff permitting them to speak with me in regards to a mod. this seemed to be the most difficult for any to unerstand. Again, only due to many prayers and believers that God’s word would not come back void!! I’ve had a nightmare of a experience. I could not even begin to list here all of the issues, and the sleepless nights I have endured. My advice to all is do not take NO for an answer for NO spelled backwards is ON (you must deal with this process aggresively) not in a nasty manner but in a presistent manner, and hours of research where you actually flood them with info. In several of the post above borrowers were encouraged to file for Bk, my advice to this would be that this is and does provide GREAT protection, and perhaps if you have a high debt load of unsecured debt including taxes, arreages….that BK does provide a fresh start and put you back on the road to financial recovery. Don’t worry about credit cards, b/c unbelievably you will begin to rec. c.c offers within months after filing. They will have a $300-$400 limit but this is excellent as the unexpected does occur that cash may not necessarily be available. But such low limits helps you to control your spending but at the same time gives you the opportunity to begin to reestablish a favorable credit history!! Again I suggest that BK be filed only after a successful modification; otherwise you will be caught in between you can or you can’t file. Not unless you have an atty. that will see you through a mod. most do not. Some lenders will want you to reaffirm the mtg debt which is assinine as a mod is not gauranteed even after reaffirming. It just allows them to go after you when they take a loss of selling the property as a REO. Not a smart move on a bk filers best interest. You do not have to reaffirm your debt as the moderator explained above, not until you know what debt you will be reaffirming (as in a modified payment) Be prayerful, diligent, persistent, and very knowlegeable as well as aware of the changes that will continue to occur with HAMP or any other mod. program. The answer does not have to be taken as NO, for NO generally means not right now, not NO as to forever. You’ve worked to hard to have the American Dream blow up in your face and suffer the American dream defeat. Tough he slay you; yet you still trust. Everthing happens for a reason, and during various seasons of life. Sorry to comment so long, but it is my only hope that something written here is of benefit for someone. P.S. as for a rental property mod. that is an entirely different beast all together, expecially if in an active BK!! A mod is possible for rental properties, it will just depend on various other factors and the major one being the lender!!! I’ve had to hire a mod. attorney to try and move this. I just pray that he is successful, never know until it is a done deal. I trust but I shall not trust a human completely we all are subject to err. Blessings and good look to all others struggling! Things must turn around. When your back is up against the wall wall do you have but your faith, in that everything is going to be ok!
Blessing,
Vel
P.S.S. please excuse any typos, missing words, as I did type this haste, and do not have the time to proof read.
I am working directly with my lender with my Loan Modification, they are currently processing my application and have told me verbally that my forclosure for April 6th is now on hold during the process. They do not give written proof only verbal. Is this common practice for the lender to only give a verbal response, it makes me a little nervous even though our phone conversation is recorded?
Thanks
Got approved for HAMP loan in June 2009 made 3 trail payments as requested sent all paperwork by mid July 2009. During 3 month period got numerous calls for missing paperwork and to call Saxon Mortgage. Each call loan in HAMP all is fine disregard all is fine. 4th month called about HAMP loan and payment. Said I was step 2 all is good continue trial payments for 2 more months. I did! Mother become sick with colon cancer in Sept. 09 was busy care taking for her 100% of time. Missed Dec. payment didn’t even realize for December. Call Mortgage several times in January requested more papers faxed them said loan under Hamp program fine. Mother had surgery Feb 5th went well on Feb. 11 rushed back into surgery, now she’s fighting for her life. Focus on mother and care. continue to make payment for Jan, Feb. and March. Call March 26th never received anything from Saxon since Jan. 2010 and caught up in totally care for Mother who was finally released March 22. I returned home the 26th to be told on the phone I made that we where dropped from program due to missing payments of half of payment for Sept. none for Dec. and Jan.? Called back and faxed over Western Union receipts for July through March missing Dec. 09. Talk to rep. who said she see’s all payments with a full payment and a half for Sept. 09. But that a letter was sent out March 8, which we never received stating we where dropped from HAMP program? I went yesterday and sent western union the other half so all payments are in. I made first 3 trial payments then additional 2 payments. I had to rely on calling in system due to mothers illness. They always said my loan was fine and going through until March 26 when we called. NEVER received anything by mail or phone since January??? What should I do?? I’ve written FBI, Congressmen of Texas, President, HUD and any other things I find on line. I have sent both faxes and emails that I need this HAMP loan to be re-looked at and process in order to keep my home. Any other suggestions it’s only ???? Please HELP ME
Futhermore:
I am up for the fight and am fighting as I have read on line many others have and did get there loan through. We do meet all the requirements by the way!!
I have been working with NACA for a modification with B of A. Recently denied, I subsequently received a written proposal thru NACA’s website that noone seems to know anything about. Can they do that…make an offer/proposal then say they don’t know anything about it. This denial comes from NACA and B of A. It is hard to get a hold of these people.
I have been in the loan modification trial period since December 2009. I made all 3 monthly payments that Indymac Bank required me to. Then by the 4th month they still told me they had no information on whether I was approved or not. I made a payment on March 1st and called and asked again if our plan was approved. I was again told it was in review and just to stick with the same modified payment amount. Now it’s April 10th, I called again to find out my status. I was told that our plan was denied on March 30th because we did not submit another profit and loss statement. I was never asked for another profit and loss, I was never notified that they needed one, I was never notified that we were denied. Indymac said they weren’t required to send anything saying we were denied. So now they tell me I’m 60 days late on our loan, my case is closed for the modification app, and my credit is ruined because every month of the plan they report us delinquint. How exactly is this helping anyone? And who can I contact to raise enough hell to someone that the banks will actually have to help out the homeowners?
I wish I knew what to tell you. In South Carolina, if you are eligible for modification, that’s a defense to foreclosure. But probably not everywhere else. All I can say is call your Congressman and Senators. Perhaps if they get enought complaints, they’ll do something. What you tell me I hear almost daily. The program has been a failure, and there’s really no mechnism to make these lenders and servicers comply with the HAMP program.
If you read these comments, you see that your experience is not unique. I wish I had a solution but don’t. Keep complaining to your House Rep and Senantors.
My loan is really messed up with over two years of trying to work out issues with my servicing company. Now I am at the point of either a federal law suit against my servicer, or a 13 and try filing a advisorial complaint against my servicer. Can I get a Hamp in a 13, how likely is the servicer going to be to work with me if I have respa concerns on how they have handled my loan over the past two years. The servicer even went as far as to file an Notice of Default and then With drew it two weeks later after my Lawyer sent him a letter. They tnen transfered my loan to another servicing company two weeks later. What are your thoughts that they know they have loan issues if they removed an NOD after getting a letter from my lawyer?
Bank of America Announces Customer Disaster Relief Program Following Severe Floods in Tennessee
I think that Bank of America should be more concerned with the other flood in the news. The flood of foreclosures because they have not given all the loan modifications they promised the American Tax Payer who loaned them 45 Billion Dollars. I do not believe anything Bank of America says. It seems like Bank of America always has a hard time putting their money where their mouth is. This is probably just like when they announced modification relief programs and did not do all the modifications they promised. When is Bank of America going to have a press release that says “Bank of America Announces Customer Disaster Relief Program following Bac Home Loan Modifications.”
Which incidentally, I have a question:
WHERE IS OUR LOAN MODIFICATION BANK OF AMERICA!?
If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!
BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled “Piggies” I invite you to listen to this song on youtube and see if it appropriately fits.
http://www.youtube.com/watch?v=NTmeHM-Hojg&feature=related
Have you seen the little piggies
Crawling in the dirt
And for all the little piggies
Life is getting worse
Always having dirt to play around in.
Have you seen the bigger piggies
In their starched white shirts
You will find the bigger piggies
Stirring up the dirt
Always have clean shirts to play around in.
In their ties with all their backing
They don’t care what goes on around
In their eyes there’s something lacking
What they need’s a damn good whacking.
Everywhere there’s lots of piggies
Living piggy lives
You can see them out for dinner
With their piggy wives
Clutching forks and knives to eat their bacon.
Patricia Barbosa – 818-713-2886
Assistant Vice President Office of President at Bank of America:
Call Patricia Barbosa if you want to complain about your loan modification process. She is a CEO in charge of home modifications.
When I filed my lawsuit against Bank of America, myself and United Law Group thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath.
Please stand with me and United Law Group and send an email to Bank of America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods.
One blogger named Terri sent me an email stating: “You won’t believe it but while I was at work today I had a voicemail from an advocate from BofA. What do you think about that? No calls all this time, I respond to your email and I get a cal!. How do you like that one?
So please send your email directly to Bank of America and include the following:
1. Your name
2. Your complaint concerning your experience with Bank of America.
3. Please end your email “I support John Wright vs. BofA Lawsuit!”
4. Please send a copy of your email to johns-wright@hotmail.com
5. Please send your email to BofA CEO email below:
CEO Brian Moynihan:
brian.t.moynihan@bankofamerica.com
WELL I HAVE HAD ENOUGH AND I AM FIGHTING BACK!
John Wright Vs. Bank of America
Please join my fight or show your support through your comments at http://www.unitedlawgroup.com
Divided we might have fell America. UNITED WE MUST STAND!
Sincerely,
johns-wright@hotmail.com
Good post, The Home Affordable Modification Program is an excellent program. My brother received a modification in 2 weeks from Bank of America using this program. It’s good that you’re helping to get the word out.
My brother and his wife are in the HAMP program. He was recently diagnosed with terminal cancer. Chemo and radiation treatments begin this week. He will work when he can but fears falling behind on his mortgage payments. Is there something they should be doing to avoid foreclosure? Would contacting their lender put them on notice so as to escalate foreclosure proceedings?
I need help!!!!! My mortgage is with Chase home finance, and we have been working on this modification since June of 2009. It has been a year, and we keep getting the run around. Trial Mod payments began 10/2009 and we are now in the 9 th month.
Does anyone out there know where I can get help or at least file complaints with this company. The only one I know of and I am sending in the complaint is with the Department of Corporations in California.
Signed,
Frustrated
I really appreciate your firm reaching out to the consumer to inform and help them. I did an interesting investigative article that every current and future homeowner should read. A top federal attorney helped me with the research. If we change our angle when dealing with banks; and let them know that we understand how a bank really works, then more mods would be pushed through. I am surprised more attorneys aren’t using the “fractional reserve” argument to work their way up the totem pole of ignorance at these banks. Keep reading:
Behavior Never Lies
It’s not that banks want to foreclose on delinquent
homeowners; it’s that they really don’t lose when they do.
PART 1
It’s time to stop theorizing about whether or not banks want to take foreclosures back. By peering behind the curtain and exploring how banks create mortgages, it becomes easy to understand why the foreclosure crisis is not going away. Foreclosures are, after all, a planned scenario built in to bank’s business models and are quite a profitable part of their overall business.
“Banks don’t lend money – they create it.”
In 1961, the Federal Reserve Bank of Chicago published a booklet entitled Modern Money Mechanics, which revealed the inner workings of our modern banking system. Known as a fractional reserve system, banks must maintain legally required reserves equal to a prescribed percentage of its total deposits. Generally speaking, banks must always keep a monetary reserve of 10% against most transaction accounts. In other words, if a bank has $10 billion in total deposits, $1 billion must be held as “required reserves”; the other $9 billion is considered to be an “excessive reserve” and this amount can be used as the basis for new loans.
PART 2
We would logically assume that banks are taking quite a risk by creating new loans for consumers derived from 90% of depositors’ money, but this is not reality. What really happens is that banks create new loans for consumers on top of their excessive reserves out of nothing; banks don’t actually touch their depositor’s reserves for lending purposes. If they did, banks and their depositors would be in big trouble; especially in today’s economy. This practice of fractional reserve lending is how our money supply expands and where the term inflation is derived from. As stated in Modern Money Mechanics:
“Of course, they (banks) do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes (home loans) in exchange for credits (money earned by a borrower and paid to the bank) to the borrrowers’ transaction accounts.”
PART 3
As long as the 10% reserve requirement is satisfied, banks can keep creating new loans with no monetary backing to satisfy consumer demand. It’s important to realize that new loans to borrowers represent money that will probably be deposited into other banks by individuals and businesses being paid off with each borrowers’ loan money. These new deposits increase the reserves at those particular banks, allowing them to re-create the process just described, which adds exponentially to the money supply. This deposit/money creation loan cycle can go on to infinity. For every new deposit that exists in the banking system, nine times that amount can be created out of nothing and lent to consumers. In fact, $10 billion in deposits turns into $90 billion in newly created money available for loans. This money is simply created out of thin air by the Federal Reserve Bank and wired to the web of commercial banks it sponsors. A bank “loan” literally springs into existence based on consumer demand; that’s when the printing press starts churning out the new money to satisfy the “loan”. Homeowners believe their mortgage is money derived from their bank’s existing assets, not fractional reserve “funny money”.
In the case of a home loan, banks simply create a piece of paper called a Mortgage Note that a homeowner makes installment payments on every month; with interest. If a homeowner fails to pay as stipulated in the note, the bank can take that homeowner’s home. The homeowner literally bears all the risk while the mortgage lender put up nothing, as stipulated in Modern Money Mechanics. To banks, a home “loan” is a nothing more than a bookkeeping entry – a theoretical liability on paper.
PART 4
“Some consideration would be nice.”
Most people assume that a home loan comes from actual bank funds or a bank’s existing assets and not from simple bookkeeping entries as fractional reserve practices allow. In 1969 there was a Minnesota court case involving the First National Bank of Montgomery v. Jerome Daly. Commonly called “The Credit River Case”, the First National Bank of Montgomery was seeking to evict Mr. Daly from his residence, which it had foreclosed on. The defendant, Mr. Daly argued that according to the mortgage document he signed with the bank, both parties had agreed to each put up a legitimate form of property for the exchange. In legal terms, this is referred to as consideration. Mr. Daly went on to explain that the banks did not honor their contract with him because the money for the home was not the property of the bank before it was lent to Mr. Daly, and was created out of nothing as soon as the loan agreement was signed.
If we refer to Modern Money Mechanics, published by the Federal Reserve Bank itself, it states in plain English that when banks make loans, they “…accept promissory notes (mortgages or other loans) in exchange for credits (money earned by a borrower and paid to the bank) to the borrowers’ transaction accounts.” Modern Money Mechanics elaborates further by stating “Reserves are unchanged by the loan transactions. But the deposit credits constitute new additions to the total deposits of the banking system.” In other words, mortgages come into existence based on consumer demand and banks literally invent the “loan” out of nothing.
As the case progressed, Mr. Morgan who was the president of the First National Bank of Montgomery at the time, took the stand. He admitted the following facts, which can be found in the judge’s personal memorandum:
The plaintiff, (bank’s president) admitted that in combination with the Federal Reserve Bank, did create the money and credit upon its books by bookkeeping entry.
The money and credit first came into existence when they created it.
Mr. Morgan admitted that no United States law or statute existed which gave him the right to do this.
The jury found there was no lawful consideration and the court rejected the bank’s claim for foreclosure.
Jerome Daly kept his home. The actual court documents from the court’s files in First National Bank of Montgomery vs. Jerome Daly case can be found in the Minnesota State Law Library at http://www.lawlibrary.state.mn.us.
Only a tiny number of people know about the case because it was tried in a “justice of the peace” court; these cases are not precedent-setting and are therefore not widely published or well known. The underlying ramifications behind this case are immense though.
“Banks don’t lose money when they reclaim a home.”
Many would argue that banks actually do lose money when they take a home back in a foreclosure situation. Those who pose that argument need to understand the difference between losing money and spending money. Banks have to spend money on the foreclosure process itself, accrued property taxes, upkeep of the home and on fees associated with selling the home. These expenses usually don’t produce a net loss their books because homeowners’ initial interest payments build offsetting cash reserves for banks before a home is foreclosed on. While it is true that banks would prefer that homeowners pay their mortgage over time, they still profit from foreclosing on non-paying homeowners. In all honesty, the bank is indifferent – they win either way. They make more money in slower fashion when a homeowner pays their mortgage over time; mainly in the form of interest. Banks make less money, but make that money much faster when a homeowner defaults and a home is foreclosed on. Those who still stubbornly argue that banks indeed lose money on foreclosures must remember that taxpayers historically are forced to “bail out” banks and will continue to do so in the future. Where is the bank’s “loss” in that scenario?
If the banks put up valuable consideration for the purpose of lending for real estate, such as depositor funds, their own money or existing assets, they’d be scrambling to re-write people’s loans right now in an attempt to be replenished financially. This is not the case however. In reality, banks put up nothing for the purpose of lending and have taxpayers as a crutch; so they may as well just sit back and collect more homes.
So I guess my question to all of us who read the research article I posted on this blog (above), in combination with all of the other contributors’ horror stories would be: If you had a money printing press in your basement and all the neighbors came over to you for “loans” which were collateralized by their homes, why would YOU modify their loan terms? Seems to me you’d be one powerful property owner. That’s a bank, and that is why the bank’s behavior spells out the position they’re in.
HAMP was a smokescreen to make us feel like the government was doing something to help the homeowner. Remember that he who controls money controls the law. The banks are calling the shots, not the government…
What are the simplified diffrences between HAMP, HARP,HAFA and HOPE NOW? My lender sent me a letter saying that if I seek help thru Hope I will no longer be eligible under HAMP.
It says to notify them emeditly if seeking HOPE help. Once I get a HAMP can I then get a Harp?
great article.