Loan Mods Set to Get Easier

Dear Sue,

I applied for a loan modification with BofA. After several months of back and forth and this and that and tons of paperwork, my application was accepted and I was told that I had to make three maybe four “trial period” payments.

I made three payments, on time I might add. Last night a woman came to my door asking for more documentation. She asked for financial information that I already provided. She said that BofA couldn’t give me a permanent modification without it.

She also said that she was there on the banks behalf, but her visit made me uneasy. I didn’t want to be scammed so I told her that I was already in contact with the bank.

Have you ever heard of such a thing?

Suspicious Sally

Dear Sally,

The current administration has attempted to prevent foreclosures by initiating the Home Affordable Modification Program known as HAMP. The intentions are good, but the implementation has not been without considerable frustration.

Borrowers who have enrolled in the modification program are required to send in financial information and other documentation as part of the process. The information that has been FedEx’d, faxed and/or emailed has been reportedly lost, misplaced in the shuffle or not received. The bank’s remedy has been to hire servicer’s to make personal visits to borrowers’ homes in an attempt to collect the missing documents.

To avoid suspicion, the banks send letters introducing the servicers ahead of time. The servicer should show you a business card and copies of the bank’s letter. Maybe the bank has an incorrect address for you. You should call your contact at the bank and make sure that they have your correct address on file.

With over 450,000 troubled homeowners in the loan modification pipeline, the Treasury hopes to minimize the “documentation” problems through a new set of guidelines expected to go in effect June 1.

As part of the new guidelines, homeowners will be required to submit their paperwork before they are enrolled in the three-month trial payment program. The documentation requirements will also be eased. Homeowners will no longer be required to submit, old tax returns and pay stubs. They will only need to submit a form that authorizes lenders to request the tax return from the IRS.

“These changes were made based on lessons learned over the past seven months,” Phyllis Caldwell, chief of the Treasury’s Homeownership Preservation Office, said during a conference call with reporters. “We will eliminate the back and forth that borrowers have had in trying to submit the documentation.”

I would say that streamlining the loan modification process is a matter of good Home $$s and Sense!