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Do you qualify for a loan modification?

Understand this, "that if your bank has a Freddie Mac, Fannie Mae, FHA, VA, or HUD loan they are in function, really only acting as Servicers".

HAMP – The Home Affordable Modification Program is NOT working. To date, only 740,000 loans have been modified under this program, while funds have been set aside to modify up to 4 million loans. Let me make this clear, that of the 740,000 homes that applied for HAMP only 35,ooo have actually been approved. Banks are playing games and offering forbearance programs, and asking for thousands of dollars up front in forbearance reinstatement fees, or offering their own modification programs and as a last resort then offer the HAMP program. To find out if you technically qualify for a modification based on HAMP guidelines, click here to access the 5 question quiz on the government website, or click the heading of this article to go to the HAMP site.

The banks have all kinds of excuses why borrowers do not qualify for this HAMP program, and I am keeping track of which banks are doing what for my report being submitted to congress. But the number 1 excuse banks are using is that the guidelines are too rigid. For instance, your mortgage payment cannot exceed 31% of your gross income for HAMP and 38% of your income for another Loan Mod program. so take your income and X's 31% and that's your payment. If this is too high, then you will need to get aggressive and ask for a loan restructure, loan note reduction and interest reduction and all these departments seldom know what is really available, so keep calling and asking for the loss mitigation department.

In regards to HAMP, first of all, loans were not originally underwritten with this 31% number, so technically this makes almost all borrowers eligible for HAMP. However loan servicers are saying the formula is too narrow and does not take into account all the other debt borrowers have or are piling up during the economic slowdown. So these loan servicers shoot down these loans more often than just follow the guidelines as they have been hired to follow.

Regardless of this excuse banks are throwing around homeowners that are suffering.

Some servicers are coming up with their own plans for modifying loans. From what I am experiencing as well as hearing from my readers, and from other media reports, most of these “plans” are a joke, intended to benefit the lenders, intended to get a little money and end up in failure for the borrowers.

Still other lenders are putting people into modifications on a “trial basis,” HAMP does this as well, I have been gathering information on this and ask for Whistle Blowers from all sources to give us the details of unethical bank dealings. You see that as long as the bank “modifies” the loan, the bank collects government incentives, whether or not the modification benefits the borrower.

What is clear is that servicers need a wake up call for playing around with the guidelines for the HAMP program, or it will continue to fail. I am not advocating that all delinquent borrowers should get a 2% modified rate for the life of the loan. Perhaps dropping the rate to what is truly affordable, given all a borrowers current debt, and current income, for a period of time, perhaps 10 years.

In any event, the push is on to get banks to modify loans, so the government is once again handing out money to banks to make this happen.

When do we stop rewarding banks for their failures and poor management, and start taking care of the people in this country?

So do not get discouraged, if you are not offered the HAMP program email help ASAP at peace.courage@gmail.com

Home owners possible options:

Workout Options Retention: Full or partial reinstatement, Short-term or long-term forbearance, Repayment plan, Loan modification, FHA partial claim / MI claim advance


Workout Options Liquidation:Full payoff, Whole pre-foreclosure sale, Short sale, Deed in lieu of foreclosure (foreclosure date needs to be 60 days out or more, and their second must be the same bank as the first in order to do a short sale), Delinquent loan assumption.

Call your bank, let them know you are not paying any money to reinstate your loan and that you are asking for a loan modification or note reduction and interest rate reduction. have them list all of the home retention programs that your bank is offering, ask if you have a Freddie Mac or Fannie Mae loan, and if you do not get the responce you need then go to www.freediemac.com or www.fanniemae.com


Base Documents for a loan modification that you need to send in every 30 days whether they ask for them or not.

􀂃Hardship letter
􀂃Seller’s financial statement (BFS 1126)
􀂃Recent 2 pay stubs or P&L for last 2 months
tax return if self employed
􀂃signed 1046 T
􀂃 Bank Statements

Make sure at the top of each page sent to your bank that you include your name, account, property address, and last 4 numbers of your social