Making Home Affordable: Secrets to Bank of America Modification Process
When my wife and I started looking to buy our first home together in early 2005, we had a vision of living in a single family home in a trendy area of Silicon Valley that was close to all of the city’s amenities and within biking distance to both of our jobs. Unfortunately, reality hit us hard in the form of sticker shock as we started seeing the prices of some of the homes in the area that we had set our hearts on. After using several mortgage calculators to understand how much these homes were going to cost us per month, we both knew that the mortgage payments would stretch our budget and leave very little money left for anything else. We considered buying lower priced condominiums in the area, but we knew that condominiums did not appreciate as well as single family homes. As we were about to give up our home search in despair, we passed by a duplex for sale and stumbled upon a well kept secret that neither our Realtor nor our Lender had told us about – rental income.
The original guidelines of the Making Home Affordable program did not provide help for unemployed people facing foreclosure. Throughout 2009 the percentage of unemployed people facing foreclosure steadily grew. The Obama Administration modified the Making Home Affordable Program to address this in March of 2010. A temporary forbearance plan was introduced. To qualify an unemployed person must live in the home on which they no longer can make the loan payments. The balance of their loan has to be less than $729,000. They have to request assistance within the first ninety days during which they can no longer make their regular monthly loan payment. They also have to submit proof that they are receiving unemployment insurance benefits.
Has the loan entered into active foreclosure and if not, when will it? This is something you should ask every time you call Bank of America throughout the modification process. Most of the time the foreclosure process continues to progress even as the loan modification process is carried out. The two are not handled within the same department and until you have an approved loan modification, you will always need to be aware of exactly how behind the loan is. If it looks like the process will take long enough that you fall more than 90 days behind, you will want to seriously consider submitting a payment to “buy another 30 days” to work through the modification process. If possible you will always want to avoid letting the loan go into active foreclosure.
If they are still unemployed at the end of the three to six month period, unemployment insurance benefits are no longer counted as income. If the person does not qualify for a modification under the Making Home Affordable Program, their mortgage company will consider them for an alternative to foreclosure such as a short sale or a Deed-In-Lieu of foreclosure. In the initial guidelines published there was no clarification as to how it would be determined which unemployed people would be eligible for the temporary plan from the fourth to the sixth month. The Obama Administration indicated that they were moving to implement this as quickly as possible. However, each individual mortgage company has to process the paperwork connected with each application. The administration hoped that it would be offered within several months. What do you do if you are unemployed and find yourself in a position where you no longer are going to be able to make the monthly payment on your loan? Call your mortgage company. Ask for the Loss Mitigation Department. Let them know your situation. Advise them that you want to be considered for the temporary forbearance on your loan available under the Making Home Affordable Program. Keep a record of the name and phone number of the person you talk to. Also write down what they tell you.
At the same time contact a lawyer who represents people facing foreclosure. If you do not have the money to pay for the services of a lawyer, contact a local non-profit agency approved for housing counseling by the department of Housing and Urban Development (HUD). There is a list of these agencies on the HUD website. Ask them for an appointment with one of their housing counselors. Their services are paid by HUD and are free to you. Get the lawyer or the housing counselor to represent you with your mortgage company. They are skilled in what they do. They will be able to do a far better job getting assistance for you than you will be able to on your own. One major problem mortgage companies have had is that they have not staffed their loss mitigation departments adequately. People facing foreclosure who have applied for loan modifications to save their homes have complained about the problems they have had dealing with their mortgage companies. Many have become so frustrated that they have given up.
Learn more about Obama Mortgage Relief Plan Qualifications.
