By: E. Jason Billick
Home loan modifications still present the best avenue for homeowners to get back on track when they’ve fallen behind on their mortgage. It makes sense. The Making Home Affordable program that began in 2009 was designed to modify delinquent loans so payments became affordable and sustainable for financially distressed homeowners. Unfortunately, the program was poorly implemented and resulted in several loopholes ripe for banks to take advantage of.
Bank of America was one of the first lenders under fire for alleged abusive practices under the Home Affordable Modification Program (HAMP):
Articles like the one above illustrate some of the challenges entities like the Consumer Financial Protection Bureau face when determining how to regulate this process. The truth is, there are thousands of homeowners who have experienced the HAMP modification nightmare of submitting financial documentation over and over to their lender only to discover the information was either lost, destroyed or ignored.
Our firm represents homeowners faced with lenders abusing the HAMP process. We’ve seen banks fail to honor modification agreements, deny permanent modifications to those who have successfully completed the Trial Payment Period, purposefully delay the loss mitigation process by losing paperwork, and demanding homeowners to send in payments with no intention of granting promised permanent loan modifications. The list goes on.
For homeowners, one of the first things you can do to help yourself is determine whether you are even eligible for a HAMP loan in the first place. The eligibility criteria list is lengthy, but there are a couple of preliminary questions that can first be answered before you dive into the process.
First, if your current mortgage payment is less than 31 percent of your gross income, you will not be eligible for a loan modification under HAMP;
Second, your loan originated on or before January 1, 2009;
Third, you are currently undergoing financial hardship;
Fourth, your property is not condemned and it’s a one-to-four-unit residential property;
Fifth, an escrow account must be established;
Sixth, there are some loan principal balance limitations that may apply;
Seventh, applications must be submitted no later than December 31, 2015; and
Eighth, check makinghomeaffordable.gov to verify whether your lender participates in HAMP.
Be very cautious of non-lawyers willing to take your money to help you through the HAMP process. Many of these services are scams. It’s highly recommended to seek an attorney if you are facing issues with the HAMP process.