Wednesday, July 7, 2010

Getting Denied For Loan Modification

Just received this comment today!

It's worth making some additional comments about.

Getting Denied for your Loan Modification-

Just saw this site and the comments about CitiMortgage today.

We are in the same boat as Jennifer & Maranda in that we were denied a permanent modification after a trial period of 7 months. But what I haven't seen mentioned is our experience of never being told we were denied! (no denial letter...still don't have this). What happened was the collections department sent a letter saying we were in default for two months and threatening a foreclosure. Of course we freaked out. After raising all kinds of hell about the circumstances and giving them additional information about our income, we're now being considered for a 'traditional modification' (I believe this is a Fannie Mae program) and this is pending (this just came up yesterday).

What were most confused about is the collections dept and the mitigation dept are on different planets! Anyway, now that some time has passed, can you tell me whats happened in your cases??? Thanks.

 Thanks for leaving your comments.

It is pretty unbelievable how this stuff happens in the banking world.  Now failing to mention the pressure the government's putting on the banks to give a resolution to consumers in a timely fashion would not be good.  The Government has set things back with this pressure by forcing psuedo resolutions to keep a quick response timeline in tact only to have these resolutions fail more times then not.

What I have seen is many of these come across my desk over the past few months.  Ultimately you will be asked to bring in the difference between the trial period payment and the previous payment you once had.

Example:
Let say your trail payment was $1000.  Your normal payment was $2000.  The thousand dollar difference is the amount in question and in almost all cases they will ask you to repay the difference immediately for all months the trial payment was made.  In the example above it was $7,000 difference which you could see being a problem for many families.

Funny how they just think that there is money laying around to be paid to the mortgage company.  I bet they made the consumers sign a form stating that this is a trial and that the money would be due at the end if the modification wasn't approved. After 7 months you get a little comfortable and think there are no problems.  Then again, you wouldn't be asking for a modification unless you had a financial need to address.

Solutions:
Well in this case you are left with very few options.

Paying the lender back what is owed is one of the most important options because if you don't they will start the foreclosure process.  Additionally, if you get lucky, like the commenter apparently did, you get a second shot at a loan modification.  I do have to say that from my experience the commenter is not looking good at this point.  I do know that those who work at the modification the hardest are those who succeed at them.  Giving up will only lead you down the path of a negative solution.

Short Refinancing can be a choice for you.  Failing at a modification is a requirement for a short refinance but on the other hand if you can't afford to make up the differences on those payments then you could be in real trouble in qualifying for almost any type of program.  Most programs require a clear payment history so missing a payment could put a huge flaw in your plans.

Short Sale is a possibility as well.  There have been several changes to the short sale rules especially surrounding buying a new home.  Buy and Bail was once a hot topic but this helps solve even that problem. New rules now allow for those looking to get out from under their mortgage will let them short sell their home and then turn around and buy a new property hopefully at a lower payment.  Again the key to pulling this off is not missing any of your payments, well according to your credit report and the report needs to be current (of course!).  Also, you need to sell your home without issue regarding future payments.

I hope that helps you all figure things out post Loan modification denial.  I can help in a few areas personally.
1. If you need help looking into a short refinance then go HERE!
2. If you want to sell your home and then buy a new one go HERE!  (California ONLY!)
3. If you want help with a loan modification then go HERE!

2 comments:

  1. I agree with the post. Anyway, banks have the most number of foreclosed properties they are usually the lender. That is why, if you want to buy these properties, go to your nearest bank. There are foreclosure attorneys that are specialized in this field. Thank you.

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