HAMP Tier 2 Modifications on Rental Homes
by D. L. from Rogers, AR and by Robert from San Diego, CA
Ask Kate what to do when HAMP tier 2 modifications fail on rental properties: D.L.'s bank says the mortgage on their rental property isn't eligible for HAMP Tier 2 modification because (drum roll) they have a FHLMC/T-Deal. Well, (sarcasm here)... I'm sure THAT clears up D.L's confusion. And going out on a limb, I'm pretty sure when D.L. signed the mortgage documents, she didn't agree to a mysterious program status that can't be explained!
Yet this very financing is preventing D.L. from getting an affordable mortgage to avoid foreclosure.
Bank says we aren't eligible for HAMP Tier 2 modification as they say we have a FHLMC/T-Deal. By D. L. from Rogers, AR
Kate, We own a home in California and had to leave as my mom was very sick and economy fell 6 years ago. We have had renters in there for 4 to 5 years.
It is still under a primary resident type loan. We live in another state in primary residence.
We were told recently by our large servicer bank that we could not be approved for HAMP Tier 2 on home in CA as our loan is a FHLMC T-Deal loan. T stands for trust.
They said they have to follow Freddie Mac Guidelines although our loan is a Wells Fargo loan. My understanding from research a supervisor did from another bank independently is - these are pass through loans (whatever that is) and were around in 2000-2006.
We first purchased house in 2003, conventional loan/smaller bank who then sold it to Country Wide, then Washington Mutual purchased it and we refinanced as an ARM. Wells Fargo purchased it then. The servicer is another large bank.
We have refinanced it (cash out) once or twice. That has not come up in the modification process as a problem or reason for denial.
We have talked to Freddie Mac and they have looked it up and confirmed it is and has not ever been a true Freddie Mac loan.
From what I am seeing on your web site - HAMP Tier 2 is for private investor loan, Freddie Mac or Fannie Mae. Yet they say we didn't qualify or get approved because this type of loan has Freddie Mac guidelines.
They (underwriter) is saying that they just put it in the computer and that is what it is spitting out.
Also, I have been told by this large bank and another bank that Freddie Mac doesn't participate in principal reduction, debt forgiveness (which we need),...or 2% or 40 yr term for tier 2. But I thought I read on your web site they do. I have read on-line for Reg HAMP they do principal reduction, etc..
We have accrued principal and interest so we really need that to lower our payments. We were approved for their in-house program and they just loped the accrued principal and interest on top and made the payments higher by $400.
Also, does this 'T-Deal' (which I don't find this name in my last mortgage papers or previous) have jurisdiction if it was in some of the previous loans before?
***zz-portrait-left.shtml*** Ask Kate answers: Bank says we aren't eligible for HAMP Tier 2 modification as they say we have a FHLMC/T-Deal.
Yes, I can certainly understand why you, as the homeowner, are confused.
But mortgage lenders should not be in the dark which is why I am disgusted with the explanation you were given for the modification denial. Besides that, I think it's disgraceful for an underwriter to have so little understanding of mortgage lending process as to claim the computer just 'spit' out a decision.
Who Is Required to Participate in HAMP
According to Making Home Affordable (the official program of the Treasury and HUD), HAMP participation is required of any lender for their Freddie Mac or Fannie Mae backed mortgages.
However, participation is on a voluntary basis for lenders servicing other types of mortgages.
Principal Reduction Alternatives (PRA)
Furthermore, Fannie Mae and Freddie Mac are not participants in the Principal Reduction Alternative (PRA) program
. Yet as incongruent as would seem, Bank of America, CitiMortgage, JP Morgan Chase, and Wells Fargo do offer principal forgiveness.
As a clarification, borrowers with loans owned by Fannie Mae or Freddie Mac do not benefit from the PRA program. But, as announced in a press release on January 27, 2012, the Federal Housing Finance Agency was notified by the Treasury that they will pay principal reduction incentives to Fannie Mae or Freddie Mac if they allow servicers to offer principal forgiveness during a HAMP modification.
I do not have access to the information needed to track the background of your mortgage and I'm not sure you'll ever get reliable explanations. (Although I might add that loan servicers and lenders can call Freddie Mac to dig deeper into the history of your mortgage.)
But I hope I can direct you to sources that will help you leap-frog this T-Deal nonsense to obtain an affordable mortgage payment.
Incidentally, an in-house modification offer that raises your payment by $400 is terrible insult to a struggling homeowner who reaches out for assistance.
Where to Find Personalized Help to Deal with Your Loan Servicer
Back to your options... I have often given out the phone number of the HOPE hotline where homeowners with failed modifications can seek help from HUD housing specialists, trained to zero-in on on Making Home Affordable options for distressed homeowners. (888-995-4673 or for the hearing impaired, 877-304-9709 TTY)
But in addition to explaining options, the free MHA experts will also help borrowers work with lenders. So please call them to ask where to look in your original loan documents to find that it says you have a FHLMC/T-Deal and where in Freddie Mac guidelines it states this means you are not permitted to modify your mortgage.
You should also know that the housing experts must escalate your case if there is a complaint that you were not appropriately evaluated, inappropriately denied a foreclosure alternative, your loan servicer did not respond to you within the proper time frame, or give you enough time to respond.
I'm afraid your options at this point are to roll up your sleeves and be your own advocate when you call the HOPE hotline. In other words, create lots of noise and draw attention to your plight when you call.
Best wishes and please let me know of your progress,
I have a 1st and 2nd mortgage on my condo which I rent out. By Robert from San Diego, CA
I have a 1st and 2nd mortgage on my condo which I rent out.
I am underwater and would like to refinance.
Neither of the loans are Fannie Mae or Freddie Mac.
***zz-portrait-left.shtml*** Ask Kate answers: I have a 1st and 2nd mortgage on my condo which I rent out.
Only 1st mortgages backed by Fannie Mae and Freddie Mac are included in the HARP refinance program. 2nd mortgages cannot be rolled into the refinance.
But an alternate underwater financing program for you to explore is the Home Affordable Mortgage Program (HAMP modification)
Condominium financing is eligible for HAMP consideration, as is a property that has been rented. To get the ball rolling, call your loan servicer to see how much your monthly house payment would drop under HAMP.
If the same lender holds your 2nd mortgage, ask if they will modify it also. Otherwise, you will need to take the extra step to contact the holder of the 2nd mortgage to ask if they participate in HAMP.
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