Making Home Affordable Tips…

I learned a lot about the Making Home Affordable/Home Affordable Modification Program (HAMP) in my 2 hour call with Bank of America.

1 – If you are hoping for a huge change… this is not the answer. Not all changes are permanent and/or large. Some adjustments may last as little as 3 months.

2 – Loan modifications are not quick. If you can’t wait the standard 9 weeks for the review of your file and another 5-9 weeks for paperwork processing, you don’t have enough time and you may want to move forward with other options like a short sale or foreclosure.

3 – Give an accurate listing of all your expenses. Don’t exaggerate but don’t minimize either. Have a good understanding of exactly how much you are paying. Keep this information available for when you call the bank.

4 – You will be rejected if you have recently made large purchases or if your credit score is low. You shouldn’t be making large purchases anyway so I can’t say as if I blame the banks for this stipulation.

5 – If you have a second mortgage with another lender, they will likely require you to get approved for the Making Home Affordable Program on your first loan before they will consider a change to your second mortgage. If you are accepted for the program on your first loan, it’s easy to submit the same paperwork for your second mortgage.

6 – This should not be your only option. It’s worth a try, but don’t fool yourself into thinking this will solve your problems.

7 – If your home is not a Fannie Mae/Freddie Mac mortgage, this program does not apply to you… BUT some lenders are still willing to modify other types of loans.

8 – This is a voluntary program. No one HAS to help you. Sure it’s good business sense to lessen foreclosures on the banks part, but if you are a problem child, don’t expect any help. Banks don’t want to keep you as a customer anyway. Be kind, courteous, and polite even if you are frustrated.

According to the bank’s calculations, my husband and I qualify. We are now in the first 9 week waiting period while they review our files. We have stellar credit scores and we haven’t made large purchases in a long time. We are good candidates for an interest rate reduction from the over 7% it is currently, down to the market rates of 5-6%.

Do I really think it will really happen?

No. But it’s worth a try.

Posted by Beks on October 23, 2009 at 5:00 AM in Credit Reports/FICO, Debt Updates, General Debt, General Personal Finance, Good Info, Home Ownership, Loans, Making Home Affordable Program | 13 Comments »
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  1. John Deflumeri Jr responded:
    Posted: October 23rd, 2009 at 5:42 am

    That was an educational experience, Beks.
    No substitute for having all the proper documents. They don’t have to help you either? Wow, that’s a surprise.

    Thanks, John DeFlumeri Jr.

  2. Dollar Bill responded:
    Posted: October 23rd, 2009 at 5:50 am

    Good luck. We recently tried for a modification because hubby lost his job. The response we got: “We’re sorry, you do NOT make enough money to qualify”. Ummmm….wasn’t the point to help those who don’t have enough to pay their mortgage?

  3. SabbyAnn responded:
    Posted: October 23rd, 2009 at 6:48 am

    Have you found out how much this will cost?

    We have a Fannie loan & looked into a refi under the MHA program. The out of pocket cost for appraisals, title work, and points (not optional or to buy down the rate, these were more like variable fees) were substantial, and would have taken us 3-4 years to break even on up-front costs vs Monthly savings.

    Points were assessed via a cumulative “pricing matrix” with % equity, credit score, loan type, if you have a second mortgage, etc. They also tacked on the “adverse market delivery charge” (wasn’t that the point of the program?)

  4. Mary Taylor responded:
    Posted: October 23rd, 2009 at 7:10 am

    We are currently in the modification process with GMAC. We first applied in May 2009. Went in to the 3 month trial in July and the modification was approved in Sept. The final paperwork was sent out for us to sign and due back the end of Sept. with our first new payment under the modification to be Oct.1st.

    Well the numbers in the paperwork were wrong. The monthly payment listed was 100.00 less than the amount we were told to pay. The length of the loan was also incorrect. We called to find out what was the correct amount and loan term. They told us the paperwork was wrong and new paperwork would be sent out. That was 28 days ago. 7 phone calls later and we still have no paperwork but have been told it has been sent.

    All in all the payment is not much less than what it was before. Actually it is more since they would not modify without escrowing taxes and insurance. Even though we have never escrowed the taxes and insurance in 20 years it is mandatory if you are modifiying your loan.

    Good thing is that by having an escrow we no longer have to worry at property tax time or when the home insurance is due. Down side it is almost 400.00 more per month than what we had expected due to the escrow.

    This is a 5 year modification at which time the interest rate will adjust. Hopefully during that time my husband will find a job and our financial situation will turn around.

  5. Another Reader responded:
    Posted: October 23rd, 2009 at 8:46 am

    Not sure how this would help in your situation. Your husband is still unemployed and your money will run out in a few weeks. You can’t make the modestly lower payments unless your income situation improves dramatically. If this is the best they can offer, you need to seriously consider a short sale.

    The reality is you cannot afford this property. The house was at least in part responsible for your other debt because it absorbed so much of your income. Even though it’s a step backwards, you should consider renting and getting the rest of your finances under control before you buy again.

    The deal being offered to you helps the owner of the loan, not you. They avoid the $135,000 loss plus the foreclosure costs. The loan does not have to be written down. Consider your husband’s job prospects and the long term affordability of the house before you go this route.

  6. emmi responded:
    Posted: October 23rd, 2009 at 10:38 am

    Congratulations on jumping through the hoops to get to “approved” candidacy.

    If you get the modification on the interest rate, how long will that rate change last? Just curious here.

    I forget if you’ve said how much you are in hock to the bank for on the mortgage, but a quick calculation on a 250k mortgage shows that reducing the interest rate from 7.5% to 5.5% would drop the monthly payments by about $330. Every bit helps.

  7. Claire in CA, USA responded:
    Posted: October 23rd, 2009 at 10:55 am

    Hey Beks,
    My dh and I recently refinanced. It wasn’t a modification. It is a fixed for 30 years loan at 4.99% (We did not buy that down with points). We could have gotten 4.75, but we choose to pay our taxes & insurance ourselves. The gentleman I worked with got us qualified in less than 10 minutes, and the entire process, to the date of signing, took 3 weeks. You have to have good credit, and not be in default on your loan. Also, this is a “family” deal, so you have to mention my name to get a break on fees.

    I’m not sure if it’s kosher to post his name and phone number, so anyone that would like to call him can email me, and I’ll send you his info. My email is rcvorhis@earthlink.net. I do not get any compensation for referring people, but I’m telling everyone I know. They were so easy to work with!

  8. MW responded:
    Posted: October 23rd, 2009 at 11:59 am

    Beks, check out today’s U-T Business section. There’s an article about an event held yesterday, and one tomorrow (Sat.), to help homeowners seeking to avoid foreclosure. Not sure if it would apply in your circumstance, but you should definitely look!

  9. Jeremiah responded:
    Posted: October 23rd, 2009 at 7:59 pm

    Howdy,

    I am encouraged to hear how much you have saved each month by trying to trim here and there. I hope it works out for you guys, especially since you have done so well at getting down your debt so far! Keep up the good work!

    I was wondering if this program costs anything to you guys…that they may end up adding to your house loan. I just cant imagine them doing all this for free, but i could be wrong…I guess our govt is trying to just give out money.

    Enjoy reading your blog and will be praying for you and your family!

    God bless.

  10. Beks responded:
    Posted: October 23rd, 2009 at 8:16 pm

    Dollar Bill and Sabby Ann – I totally feel you on that one! If we won’t save money, I’m skipping the whole thing!

    Mary Taylor – I’ve heard similar stories. I’m going to watch out for that. Thanks for the heads up!

    Another Reader – We pulled out our pencils and figured out exactly how long we can hold on. We can avoid a short sale for quite some time. Watch for this Sunday’s post on the new numbers.

    Emmi – They won’t tell us how much we’ll save or for how long for another 9 weeks or so. A percentage point or two would be HUGE!!

    Claire – Unfortunately, we can’t refinance since we are so far under the value of our home.

    MW – I’ll look into it!! Thanks for the local heads up!!

  11. L responded:
    Posted: October 24th, 2009 at 8:17 pm

    Just wanted to say I appreciate your efforts and positive outlook, as well as the commentors. I think some people in the blogosphere(I feel lame typing that, sorry!) are HOPINHG to see others fall short of their goals. Keep it up and try to ignore those that are clearly trying to bringing others down:)

  12. Nicole responded:
    Posted: October 28th, 2009 at 10:31 pm

    That would be really cool! I hope you get it!

  13. Susan responded:
    Posted: November 11th, 2009 at 2:30 pm

    I am currently on a loan modification trial plan with BofA that I received thru the “Save the Dream” event in SF thru an organization called NACA (Neighborhood Assistance Corporation of America). The event was the weekend of October 16-20 and I made my first payment this past Monday (due November 15). For whatever reason, NACA seems to be able to navigate thru all of the bureaucracy and get things done efficiently and affordably. After 4 month trial period (per Fannie Mae requirements. You have to be delinquent on home loan to get a permanent modification) I will receive a permanent offer.

    The good thing about loan modifications is that there are no closing costs since it’s a modification not a refinance.

    I had previously called BofA on my own and got nowhere.

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