Loan Modification Denial After 6 Trial Modification Payments

by NOulavet
(New York.)

I applied for Loan Modification 14months ago. The 2nd mortgage, a home equity line of credit, is now reported in my credit file as charged off.

I made the trials payments on my 1st mortgage for 6 months without hearing anything from my lender. Then I receive a letter which said a permanent loan modification was denied.

What should I do now? Please suggest. Thanks.

Mortgage Loan Modification Answer:

by Loan Modification Expert - Dan North

What you options are depends on if you can afford the home at the modified payments you were making and what your debt to income ratio is after the loan modification.

You should have received a denial letter with an explanation of why your mortgage loan modification was denied. If you did not, request an explanation for the modification turn down. This will help you decide what your best course of action is.

Home Affordable Foreclosure Alternatives (HAFA)

The Home Affordable Foreclosure Alternatives-HAFA Program covers your options to avoid foreclosure when you can not afford your home or are unable to negotiate an affordable mortgage loan modification with your lender.

Both Mortgage Foreclosure Alternatives under HAFA Offer $3,000 Relocation Assistance

Home Affordable Foreclosure Alternatives Program – Short Sale: A “short sale” is specifically designed to help borrowers who are unable to afford their first mortgage and need to sell their home to avoid foreclosure, even if the sale price is below the amount owed on the mortgage.

Once the sale closes, you will be released from all responsibilities for repaying your mortgage. Plus, you will receive $3,000 to help pay some of your moving expenses. (The check will be paid to you by the settlement agent as part of the closing.)

Home Affordable Foreclosure Alternatives Program – Deed-in-Lieu of Foreclosure: With a “deed-in-lieu of foreclosure” (DIL), you voluntarily transfer ownership of your home and all real property secured by your mortgage loan (Property) to your lender to satisfy the total amount due on the first mortgage.

Additionally, you will be eligible to receive an assistance payment of $3,000 to help with your moving expenses.

Usually your lender will require that you try to Short Sell your home first before approving a Deed-in-Lieu of Foreclosure.

Fight To Stay In Your Home

If you lender stated the reason for Loan Modification denial you can propose a counter offer that may pass the Net Present Value-NPV Test (download the NPV spreadsheet). This will take some work on your part trying different numbers in the spreadsheet until your counter offer passes the test.

This may include lowering home owner insurance costs and lowering your property tax to reduce your escrow payments which can make the difference on passing or not.

Put Some Pressure On Your Lender

Report what happened on your loan modification to the HAMP Escalation Team and ask for assistance. File a complaint on your lender with the correct government financial regulatory agency.