FHA Loan Modification with Quitclaim Deed: Ironic Twist
by Jordan from West Jordan, Utah
Ask Kate about getting an FHA mortgage loan modification after being granted a quitclaim deed to the property: I've heard from many irate borrowers regarding the loan modification process and quitclaim deeds. But there's a twist to Jordan's saga. You'll want to read her WHOLE story. It begins like this... Jordan's ex has no interest in the house so he granted her a quitclaim. Yet Wells Fargo refuses to modify the mortgage, requiring an assumption that the terms of the loan will not allow.
FHA Wells Fargo Loan Modification with a Quitclaim Deed By Jordan from West Jordan, Utah
I am BEYOND frustrated right now.
My questions are:
1) With an FHA loan, can I be reviewed for a mortgage modification even though I am not on the loan? I DO have a fully executed quitclaim deed recorded with the county.
2) Do I have to ASSUME the loan to get help? (I have NEVER heard of a servicer refusing to help and demanding an assumption of the loan when there is a QCD!) In fact, my note has an assumption clause and it states that I cannot assume the loan unless the borrower passes away. The borrower isn't dead. He wants nothing to do with the house.
3) Does it seem to you that regulations have been violated in my case?
Background to Jordan's Loan Modification with Quitclaim Deed Saga
A little history on myself and the situation:
I purchased my home along with my ex boyfriend in July 2010 (thus not eligible for HAMP as the property would have needed to be purchased on or before Jan 2009). I was not able to be added to the note as I had moved here from Canada and did not yet have two years of work experience in the U.S. So, I was added to the deed. The loan is an FHA loan (GSE).
My boyfriend and I broke up and he moved out and it was agreed that I would keep the home.
I was always current on the house payment until I had an extreme medical emergency and was on medical leave for most of last year. I ended up falling behind on the mortgage. I submitted for a modification soon after that.
Firstly, I had a single point of contact who is, from my knowledge, required to call me every 5-10 business days but didn't do that. I sent in required documents, and only after me calling them several times and demanding a supervisor did I find out that they never got the documents and had closed the modification due to "lack of documentation".
I went and got a QUITCLAIM DEED and I sent in the entire packet again and they resubmitted the modification.
I was forced to file for bankruptcy a few months ago. They removed authorization to speak to me because they needed attorney permission to do so. A couple of weeks ago my bankruptcy was dismissed due to a snag and I will have to refile.
I am no longer represented by the attorney and they STILL refuse to speak to me despite knowing that 1) I am no longer represented by the attorney 2) My bankruptcy was dismissed and 3) I have the quitclaim deed.
I filed a report with the CFPB outlining my concerns and asking for help. The Wells Fargo employee who replied to the CFPB complaint is with the "office of the president". She said that they couldn't speak to me because I have an attorney. I advised her that I am no longer represented by an attorney, and that the bankruptcy was dismissed.
I asked her what the heck was going on with my modification. She refused to discuss it with me saying they have "never" had authorization to discuss the loan with me. I told her that I've been in contact with them for five years.
My Actual Question to Kate
This is where my questions come to you, Kate.
She told me, I quote, "You cannot do a modification with a quitclaim deed. You have to assume the loan for us to help you. And, in order to submit for an assumption you have to be current, credit worthy, and without any bankruptcy proceedings to be considered" - She sounded like such a smug know-it-all saying this to me because she knows I am refiling my bankruptcy, that of course my credit is ruined and that I am not current. Oh, and lets not forget I can't even MAKE a payment because I am in foreclosure and they never sent the reinstatement quote I requested.
Mortgage Irony: Lenders Should Listen to Borrowers
I was absolutely shocked because..... DUN DUN DUNNNNN I AM ALSO A MORTGAGE SERVICER MHA SINGLE POINT OF CONTACT WITH ANOTHER COMPANY!
(However, I work on conventional loans.)
I asked to speak to someone who DOES know what is going on. She again told me that no one will speak to me because they "don't have authorization from the attorney". Mind you I had JUST told her THREE times I'm no longer represented.
Sorry this was so long, but I have to know. Thank you.
***zz-portrait-left.shtml*** Ask Kate answers: FHA Wells Fargo Loan Modification with a Quitclaim Deed
ARGH! I feel your pain.
Truthfully, not being an attorney, I do not know if your rights have been violated from a purely legal aspect. But this is outrageous behavior and I think filing a complaint with the Consumer Financial Protection Bureau (CFPB) was very smart.
Fannie Mae and HUD: Non-Cookie Cutter Modifications
Even though I do not agree with the way it is sometimes handled, Fannie Mae allows a non-borrower to modify a mortgage if they have been added to the deed by way of quit claim.
The reason why I am not in full agreement with Fannie's policy is because the credit history of the original borrower who has quit claimed off the deed is affected by the modification. And often, they are given no say in the modification.
Regardless, here is what Fannie Mae says about quitclaim deeds in regards to a conventional HAMP loan modification.
"In cases where a borrower and co-borrower are unmarried and either the borrower or co-borrower relinquish all rights to the property securing
the mortgage loan through a recorded quitclaim deed or other document sufficient under applicable state law to transfer title, the non-occupying borrower who has relinquished property rights is not required to provide income documentation or sign the modification agreement."
Additionally, here is what HUD says in their Loan Modification Frequently Asked Questions:
"Can a lender qualify an asset for the Loan Modification option when the borrower is unemployed, the spouse is employed, but the spouse's name is not on the mortgage?
Based upon this scenario, the lender should conduct a financial review of the household income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment, but insufficient to pay back the arrearage. Once this process has been completed the lender should then consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage."
Your situation is not an exact fit to either of these scenarios. But I am hoping these quotes will add strength to your negotiations as you continue to fight for an affordable mortgage.
Loan Assumption and Mortgage Modification
Speaking of loan assumption, I thought you would like to read Mandy's story, especially in light of your profession. Mandy was told after her loan modification was completed, her husband would be removed from the mortgage. You cam probably guess what happened: Mortgage Assumption AFTER Mortgage Modification
Ask HUD Counselor for Assistance
What's your next step? I suggest calling a HUD counselor for assistance, especially since you have FHA mortgage financing. Start the conversation by calling 888-995-HOPE (4673). But go here first to know how to prepare... Free Making Home Affordable Housing Counselors
In closing, you will also want to read the icing on the cake
... HAMP Loan Modification Scheme Exposed
Got questions? You are invited to ask Kate for answers
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