FHA Loan Modification: Partial Claim Promissory Note
by Jennifer B. from Livingston, Louisiana
Ask Kate about the FHA loan modification program that includes a partial claim promissory note: Jennifer successfully completed her 3-month payment plan trial for a mortgage modification and was approved for a Partial Claim to bring her home loan current.
But when attorneys, loan servicers, mortgage investors, FHA, and HUD suddenly couldn't see eye-to-eye on her final modification terms (which involved her ex-husband's signature on the Partial Claim), can you guess what happened?
Ask Kate: FHA HAMP Loan Modification, with Partial Claim By Jennifer B. from Livingston, Louisiana
I have a serious problem. The Servicer on my FHA-Insured Mortgage (Nationstar Mortgage) is now refusing to complete and finalize the FHA-HAMP Modification, with Partial Claim, after my successful completion of the 3-month trial offered to me.
The facts are my ex-husband and I purchased the home in 2006. We refinanced it in 2009.
Divorce, Possession of Home, Bankruptcy, Quit Claim Deed
We separated and our divorce was final in 2015. I received use and possession of the home and was made solely financially responsible in the divorce judgment.
He subsequently filed Chapter 7 Bankruptcy and received a discharge of the mortgage debt and signed a Quitclaim Deed over to me along with the Property Settlement Agreement that was filed into the Land Records.
Successful 3-Month Trial of FHA HAMP Modification
Immediately upon divorce I did request a Modification with the Servicer and received an offer of a 3-month trial (based solely upon my income). I accepted that offer and timely paid the trial payments.
Agreed Upon Changes to Final Modification Documents
Then Nationstar mailed out the Final Modification Documents, which corresponded with the amounts and terms in the 3-month trial, EXCEPT
the documents were requiring my ex-husband's signature too. After several phone calls between me, him, the Servicer, and his Attorney, there were clauses put into the Modification documents (Except the Partial Claim Promissory Note) saying that he wasn't going to be made personally responsible due to his Bankruptcy Discharge by signing those documents, and we were told that He had to sign everything but
the Partial Claim Promissory Note.
We did as instructed at his Attorney's office, who Notarized those Documents for us, I then mailed them in using the Pre-paid Fedex shipping label that was provided.
Enter the Investor and All Bets Are Off
I called in the following week to make sure that they received the documents and were finalizing my Modification. To my surprise, I was told that yes, they did receive the documents, but they were not finalizing it because the Investor (Some company named, Everbank) was requiring my ex-husband's signature on ALL the Documents including the Partial Claim Promissory Note to FHA or the Secretary of Housing and Urban Development (HUD). Which he refuses to do, as it makes him financially liable for the payment on a property he no longer owns and received a discharge in his Chapter 7 Bankruptcy.
I don't know what to do. I've contacted FHA, HUD, the Attorney General's Office, and Consumer Financial Protection Bureau, who all basically tell me that they can't help me because it's a legal issue that the Loan Service and Investor is requiring something that goes against FHA/HUD Rules and Guidelines.
Any Advice or Help would be greatly appreciated. I'm a single mom of 4 Children and it's not fair that we're going to lose our home after I've done everything required of me and they decided to change up the requirements.
***zz-portrait-left.shtml*** Kate's Answer: FHA HAMP Loan Modification, with Partial Claim
FHA is a mortgage program of the Federal Housing Administration which was created as part of the National Housing Act of 1934.
What Is a Partial Claim With Promissory Note
FHA borrowers who are struggling to the point of missing four consecutive mortgage payments due to a hardship (job loss or serious illness, for example) might be eligible to save their home through an interest free loan called a Partial Claim. The loan amount is limited to 30 percent of the unpaid principal balance.
Combined with the FHA HAMP (Home Affordable Modification Program), borrowers trying to avoid foreclosure can receive reduced monthly mortgage payments upon successfully completing the Trial Payment Plan
Wimps: HUD, FHA, and Consumer Financial Protection Bureau
I truly can understand why your ex-spouse would not want to sign the Partial Claim promissory note. Signing the Partial Claim could jeopardize the protection he gained by completing a bankruptcy, signing a quit claim deed, and filing a property settlement agreement as part of the divorce decree.
But I can't fathom why HUD and FHA are so wimpy. It sounds like they have chosen to throw up their hands over illegal requirements on the part of the loan servicer and mortgage investor. Since when do HUD and FHA roll over and play dead when their rules are being broken? They should be helping families save their homes! Not ignoring them!
However, I'm not surprised about CFPB. You might remember what one of my readers, Deb, nicknamed the agency. See Fangless Mediator: Consumer Financial Protection Bureau
to read Deb's story.
Action Steps to Push Through Partial Claim
Bottom line is... You're right, the behavior of the loan servicer, mortgage investor, FHA, HUD, CFPB, and AG office is deplorable. They need to be held accountable.
I suggest you write a letter similar to this one that you wrote to me but add more details, such as dates, names, phone numbers, etc. Back up the details with as much documentation as possible, for example, preliminary modification loan documents, responses, and cancelled checks from the modification's trial payment plan.
Don't forget correspondence from the various bureaus, claiming there is nothing they can do to make the loan servicer and the mortgage investor toe the line. Add a cover letter tailored to each bureau letting them know exactly what action you expect from them, including getting a written response.
Then visit your local print center to create copy packages. Send one each to FHA, HUD, CFPB, loan servicer, and, if possible, the mortgage investor. (Don't be intimidated if the investor is Fannie Mae or Freddie Mac. I've actually found their reps to be quite responsive.
) You'll also find a list of other agencies and elected government officials (remind them that they are on YOUR payroll) to include at Mortgage Loan Servicer Violates Code of Ethics
Next, send the packets out as registered mail that allows tracking and requires a dated signature upon delivery. You can compare fees among carriers but I think you'll find USPS the most affordable.
Wait a week or two for responses, however long you feel is reasonable. If your request is back burnered, ignored, glossed over, or refused, it's time to switch gears. In the past, I have sent other struggling borrowers to the local newspapers, TV stations, and radio shows to tell their plight. See JL's story at Home Mortgage Help for Disabled Veterans
Another borrower's success story involved enlisting a pro bono attorney. This strategy might work well in your situation too. See Tom's story at Predatory Lending Laws and Lender Paid MI
for details. Don't miss his follow up in the comment section at Predatory Lending Update From Tom
I'm cheering you on. Please let me know how this unfolds.
Best wishes for your future,
Got questions? You are invited to ask Kate for answers
. Or click the link near the bottom of this page to add a comment to this letter
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