Prior to March 2009, there were no standard guidelines for loan modifications in the United States.

Each mortgage servicer had their own rules for modifications. Most of these were tilted in his favor. His primary intention was to develop a way to recover the amount of his loan that was past due from a person facing foreclosure. This was done by increasing the monthly payment or extending the remaining life of the mortgage, or a combination of both. Often, when the monthly payment was increased, the final foreclosure was simply delayed. The person facing foreclosure was unable to make the monthly payment earlier. There was no way they could make a higher payment.

The Making Home Affordable Modification Program announced by the Obama Administration in March 2009 changed the process. This program standardized the guidelines for loan modifications. Monthly mortgage payments are reduced to 31% of the person’s income. For most, that means they should be able to stop the foreclosure process and save their homes.

The program only covers loans through Fannie Mae, Freddie Mac, or FHA. However, most mortgage servicers have a hard time not following the guidelines for other loans.

The Making Home Affordable Modification Program has focused on loan modifications. Many people facing foreclosure had no idea what a loan modification was. They didn’t know how one worked.

Since the program began, there has been a flood of requests for loan modifications from people facing foreclosure. This has placed a huge burden on mortgage servicers.

Before the start of the foreclosure crisis, the number of foreclosures in the United States was relatively low. Mortgage servicers had small departments with few people to handle the work. Loan modifications were rare. The work was mainly administrative.

Now everything has changed. Mortgage servicers have had to significantly increase the size of their loss mitigation departments. They have to train the people in these departments on how to do loan modifications. Mortgage servicers have had big trouble getting their loss mitigation departments up to speed.

The American public has become aware of this through horror stories of people facing foreclosure and applying for loan modifications.

A woman in California reported that she obtained a loan modification. To get it, it had to be real pain. She took him more than three months. She contacted her mortgage servicer 10-15 times a day. She even contacted the president of the company during the process.

There have been numerous cases where a loan modification application has been lost by a loss mitigation department. When this happens, the application must be resubmitted.

People are told not to call to ask about their application for several months. When they call, they often end up talking to a different person each time. They have to tell each new person over and over again the details of their request.

A New York foreclosure specialist became so frustrated with her dealings with Bank of America and Wells Fargo that she filed a complaint with the state banking department. Since then, both have made some improvements to their service.

There have been cases where people in the loss mitigation departments at various mortgage servicers have told callers that they are not familiar with the Making Home Affordable Modification program. They don’t know the guidelines or who is eligible.

Too often, people who aren’t behind on their monthly payments yet, but know it’s only a matter of time before they’re behind, are told they can’t get help until they’re 2-3 months behind on their payments. . There have been cases where people have called back after falling behind on their payments and people in loss mitigation departments have not been responsive.

At other times, people have been told that if they don’t fall behind on their monthly payments, they can’t get a loan modification. This is inconsistent with the Making Home Affordable Modification Program guidelines.

Occasionally, people who request a loan modification are sent to other people who try to get them to refinance their loan instead of helping them with a modification. There have been other cases where a case was closed and a short sale was recommended without consulting the person facing foreclosure.

As mortgage servicers scale up and train the staff in their loss mitigation departments, these issues should be eliminated. However, it may be quite a while before that happens.

If you are facing foreclosure, be aware of the problems you may have in dealing with your mortgage company’s forfeiture department. Send them applications and any other correspondence via certified mail. You can also send it via UPS or Federal Express. Just make sure you can track who receives. Keep copies of everything you just sent in case you miss something.

Every time you call, write down who you are talking to and what was said. The next time you call ask for the same person again.
If you encounter any problems, call and ask for the president of the company. Your call will likely be answered by the President’s Administrative Assistant. Keep a record of that call.

To avoid the hassle of dealing with your mortgage servicer’s loss mitigation department, you should consider hiring a lawyer or loan modification expert to help you. They will track your application for you. You won’t have to deal with your mortgage servicer and you won’t be frustrated by what happens.