HAMP Modification Refusal with 4 Major Hardships

by Betty from New Milford, CT, Litchfield

Ask Kate why my HAMP modification is refused in spite of 4 major hardships: Kate, I am not underwater, although my home has had a significant reduction in value. But I have had four major set backs that all qualify for a hardship status. I have been in the loop of one sort of another to get a modified home loan.


Betty continues... I made partial payments voluntarily while going through the paperwork to make the modified loan. Bank puts funds in escrow. Now, counts all payments as late, killed my credit score, and starts foreclosure proceedings while in review for HAMP.

HAMP Modification Refusal with 4 Major Hardships
This process has been in the works since 2010 without ANY light at the end of the tunnel. Now, as the stress builds, I research my refinance options. But since all payments are recorded as late, I do not qualify.

The bank has no interest in providing a modification because the numbers do not work. They make at least 200K if they foreclose (all the equity that I do have left).

Is there a program for those of us who have hardship that are not underwater, who need a modified program because of a hardship?

After all these years of making my payments and paying down principle when I could, seems predatory, being now that I do have a crisis, and I do have equity, that they would want a customer like me rather than foreclosure.

I have had my income reduced by 40%, repaired the house in full after a natural disaster that my homeowner's insurance wouldn't pay for out of my savings (130K), was a victim of domestic violence that lead to divorce, and than a home robbery that stripped me of more than 71K in assets.

Thankfully, criminals finally got caught but restitution is unlikely before the bank takes the house... Now what?

I have tried everything. I have more than 100 faxes, 500 pages of supplied and resupplied documents and they tell me I can't be helped because I am not underwater. I am being treated like an irresponsible homeowner and that I want something for nothing.

At present, I can't even rent a house because my credit is destroyed, all liquid funds have been invested in house that the bank wants, all retirement funds have not recovered, sell-able assets have been stolen and my salary hasn't yet recovered to pre-2009 levels.

I have no car loans, no student loans, no credit card balances. Why can't the bank just do something?

Kate Answers: HAMP Modification Refusal with 4 Major Hardships

***zz-portrait-left.shtml*** Dear Betty,

I don't have extremely novel suggestions for you.

But I want you to know someone is listening.

First, let's take a look at how the Making Home Affordable (MHA) website describes HAMP loan modification.
"The primary objective of HAMP is to help homeowners avoid foreclosure by modifying troubled loans to achieve a payment the homeowner can afford."
I'm pointing this out because within the basic criteria of initial HAMP eligibility, the MHA website does not state that a mortgage must be underwater. Now there may be other reasons you are not receiving loan approval for your modification request. But according to the MHA website, owing more than the value of your home is not part of the initial eligibility criteria.

To take it a step further, if being underwater was make-it-or-break-it, why would your loan servicer draw out your modification process for more than 2 years? Seems to me, they could have easily nipped it in the bud when they discovered you still had equity in your home.

Call a Making Home Affordable Housing Counselor

Do this first. Call a Making Home Affordable housing counselor at 888-995-HOPE. Making Home Affordable offers one-on-one assistance to homeowners and says they will follow up with mortgage servicers. Ask specifically for this help by mentioning "MHA Help" to escalate your phone call.

But get your ducks in a row before calling. Prepare a few sentences to review your hardships, your loan servicer's reasons for modification refusal, and what you'd prefer to accomplish with the mortgage.

For the most benefit, it is also recommended to gather this paperwork, the same needed for Making Home Affordable Local Community Events so you can accurately answer the counselor's questions.

Connecticut Department of Banking

Whenever a homeowner believes treatment by a lender is predatory, they should know they have rights. Part of these rights is to consult with an attorney regarding lender practices. Complaints can also be filed on the state level by going to a state.gov website. In your case, go to ct.gov where you can contact the Connecticut Department of Banking.

Or write to the Connecticut Department of Banking:
  • Consumer Credit Division
    260 Constitution Plaza
    Hartford, CT 06103-1800

  • Or questions can be addressed to 860-240-8200.

  • For complaints, call 800-831-7225.

Making Home Affordable Foreclosure Alternatives

Although not pleasant to discuss, you should know about other options offered to struggling homeowners through Making Home Affordable. Called HAFA, these foreclosure alternatives can help with transitioning to more affordable housing while preventing the trauma of an actual foreclosure.

Please follow the above link to my descriptions and if you are interested, discuss them upon contacting the Making Home Affordable housing counselor. I hope it doesn't come down to foreclosure alternatives and that you can save your home. But I want you to know of these options.

Good luck and very best wishes,


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How can I get a principal reduction or negotiate a payoff at market value?
by: Brandon

Hi Kate, Recently, I donated a kidney to my brother who, sadly, has since been incarcerated, so we've taken in his wife and child. Shortly after this, my wife's grandmother started having health issues, and we have taken her in also. I'm married to a full time student and we have 3 children of our own, so I'm basically supporting all 8 of us.

I have good credit and am current on my mortgage, but I owe $260,000 and my home appraises for about $180,000. I now struggle to keep up with our mortgage payment, but really want to keep our home.

However, I will be coming into a rather large sum of funds soon (around $160,000), and love the idea of paying off (or almost paying off) a home. I can get do this with a comparable home if I let my current house go, but I built this home and have a lot of sentimental attachment to it.

Is there any way to get a principal reduction in this home, or negotiate a payoff at market value, or anything else of this nature? I highly doubt it, but was hoping you may know.

I just can't justify taking $160,000 and putting it into a home which is $80K underwater. I feel I would basically be throwing it away. If I let it go, the bank would have to sell at fair market value anyway, so do I have a hand to play?

Thanks for your advice, and for what you do on this site - very admirable! Best Regards, Brandon

Hi Brandon, Kate here.

Truthfully, I'm not certain. You definitely have a lot on your plate but I'm not sure with such a large sum of money soon to be in your bank account, that you would still fall under the hardship category.

I suggest going for the HAMP loan modification in lieu of walking away from the home. See what you can work out in the way of negotiating, as you say, a payoff at today's fair market value.

HAMP loan modifications are originated through your loan servicer. Read more about them here.

Best wishes, Kate

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