Help for Hardship Loan Modification Process

by Johanna in Elmhurst, IL, by Jared in Bountiful, UT, and by Jill in Phoenix, AZ

Ask Kate about the hardship loan modification process: Johanna's lender is using blatant delay tactics to discourage her from modifying her mortgage. Jared isn't sure if his mom should modify or refinance her mortgage. Because Jill's social security disability income was cut back, her parents began subsidizing her house payment. But she needs a more affordable mortgage to keep from losing her home.


Flagstar Modification Mess

By Johanna in Elmhurst, IL
Flagstar Modification Mess


Flagstar approved me for a trial modification on a property that became an investment property when I could not sell the home.

My trial payments started March of 2009 after going through the process of no returned phone calls, they don't have my documents, etc.

In November 2009 I was approved for a permanent, the permanent was equal to what I was paying before with $30,000 more in principal. Flagstar sent the final documents to an address that didn't exist. They told me they would overnight the docs again twice. Even their notes stated the docs were not sent.

Eventually I received an email with the final docs. After finding the original docs on my doorstep I realized my name was correct on the envelope but the address was a combination of my home address and the investment property address.

After being worried the docs were not correct on account of the address mistake, I started calling to ensure the documents were correct so there were not be a reason for denial. Then came the cat and mouse game of phone calls.

I eventually was denied with a letter saying insufficient funds in February yet my single point of contact told me I still had the modification up until March 2 when she said I was denied for lack of documentation, since I didn't get the docs back in time, after my questions were finally answered.

I am in my second modification now and there is still no explanation for fees added into the loan and I still was never considered for HAMP.

I hired a lawyer and they say it is take it or leave it. But I feel I have been mislead the entire time. I have paid and sacrificed so much to save this house and Flagstar, I feel, has purposely cause problems and lied.

My lawyer told me the banks already were punished for what they did. I want to know how they are getting away with more dishonesty and wrongful practice again? I started this process in 2008. My loan is a Fannie Mae loan.

Thanks, Johanna

***zz-portrait-left.shtml*** Ask Kate answers: Flagstar Modification Mess

Hi Johanna,

This messy ordeal you've been put through is really sad.

Big banks have been called out on the practice of 'losing' paperwork and blaming their actions on the homeowner. But obviously, the government's fines, punishment, and lawsuits did not put a dent in their behavior.

I would set up free consultations with a few additional attorneys to see how much it would cost for one of them to write a letter to Flagstar on your behalf. By the way, I disagree with the one attorney's response. So what if they were punished already? That does not give the banks a license to act dishonestly.

Because the banks obviously were not punished enough for their participation in the loan modification schemes, I'd contact as many media outlets as possible (start with local TV and newspapers) to start broadcasting Flagstar's shameless behavior.

For a list of authorities who should know about this, go to Who to Contact in Washington DC and Local State Governments.

Unfortunately, you are limited to modifying your mortgage solely with your loan servicer. But that does not mean you have to roll over, play dead, and accept this abuse.

Please write me back to let me know how the fight to save your home is progressing.

Best wishes,


Loan Modification or Refinance for my Mother's Mortgage

By Jared in Bountiful, Utah
Loan Modification or Refinance for my Mother's Mortgage

Hi Kate,

What mortgage company can I call for my mother's specific issue with her mortgage?

Her house would appraise for about $125-130,000. She owes about $110,000 on the first at 4%, an adjustable rate mortgage. She owes about $50,000 on her 2nd mortgage at a rate of 12%.

She had a chapter 13 bk that discharged 2 1/2 years ago. But she has good credit now.

***zz-portrait-left.shtml*** Ask Kate answers: Loan Modification or Refinance for my Mother's Mortgage

Hi Jared,

Your mother may have a couple of options. You could shop participating lenders to see if she qualifies for a HARP refinance. Read more about HARP refinancing here.

The drawback here is that HARP will not roll 2nd mortgages into the refinance.

If it turns out your mom is not eligible for HARP, call her loan servicer to inquire into a HAMP modification of her existing terms to make her house payment more affordable. Depending on the lender, she may also be offered a modification of her 2nd mortgage.

Best wishes to your mom,


How Do I Modify My Mortgage Terms

By Jill A. in Phoenix, AZ
How Do I Modify My Mortgage Terms


I purchased my home in April of 2010. The price drops significantly, but surprisingly it has now gone way up. I know have more than $50,000 in equity.

My problem is I am on social security disability. As of July 2013, my son graduated high school which in turn cancelled his portion of my income. I make $1,650 per month and my loan is $1069.00. Due to my income decreasing, I am in need of assistance.

Right now I am getting help from my parents, which cannot go on indefinitely. My loan is with Provident Funding. Research tells me that you cannot get this through them.

My credit is not good. Is there any program I may qualify for? The new HARP program disqualifies me because of the purchase year.

Thank you for your answers, Jill A.

***zz-portrait-left.shtml*** Ask Kate answers: How Do I Modify My Mortgage Terms

Hi Jill,

The Making Home Affordable (MHA) program never states that a homeowner must owe more than the appraised value of their home in order to qualify for a mortgage modification. So the fact that you have equity in your home should not be a deterrent!

Of course, like the HARP cut-off date, your home was purchased past the HAMP date of January 1, 2009.

Even so, I would not let that stop you from contacting Provident Funding for a mortgage modification of your existing terms.

As Provident boasts, they are the 8th largest home loan institution and largest non-bank mortgage company in the US. So one would think that even if they are not obligated to participate in the Home Affordable Mortgage Program (HAMP), they would offer an in-house modification program. Read the tips at Who Modifies My Mortgage - Loan Modification Help before calling Provident at 800-696-8199, Option 4.

Additionally, on the website of Provident Funding, scroll down to 'Quick Links' and click on 'Having Trouble Making Your Payments' to read about their less palatable foreclosure alternatives, such as Deed-in-Lieu of Foreclosure and Short Sale.

Best wishes for your difficult situation,



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Sell a House After HAMP Loan Modification
by: Maria V in El Minte, CA

I made my 3 trial plan payments and am ready to sign the HAMP loan modification agreement my lender sent me. How long do I have to keep the property before I can sell it under HAMP? I did not receive a loan reduction, only a fixed interest rate for the life of the loan, which is in my favor because I had an adjustable rate. Thank you.

Hi Maria, Kate here...

Congratulations! So happy also to hear that you got a fixed rate and are ready to sign the permanent modification paperwork.

Fannie Mae does not allow HAMP loan modifications to assess any prepayment penalties. But I suppose a prepayment penalty could be disguised as a 'waiting period' before selling your home.

The only way to really know is to scour your paperwork.

Then to be safe, call your loan servicer and ask where in your modification paperwork you can find confirmation of no penalty for accelerated pay-off and full payment (as in selling your home).

Best wishes, Kate

Changing Lenders After Modifying a Mortgage
by: Roxanne M in Rotonda West, FL

Can I change lenders after receiving a permanent modification? My Freddie Mac mortgage was sold by OneWest Bank to Ocwen Bank in August 2013. We had JUST, after almost 2 years of endless paperwork, received a trial modification from OneWest Bank. We are now going for a permanent modification from Ocwen Bank, but they are dragging their feet.

Is there a possibility that we can change to another mortgage company after receiving a permanent modification?

Thank you for your help.

Hi Roxanne, Kate here...

While mortgage modifications only go through the current loan servicer, homeowners can voluntarily change lenders by refinancing, subject to qualifying of course.

But one thing to look for before refinancing is whether or not your current mortgage has a prepayment penalty. If you aren't sure, call the loan servicer and ask for a copy of the permanent loan document that states there is no penalty for early pay-off.

Also keep in mind that even if you refinance, there is no guarantee that your loan would not be sold back to Ocwen. As strange as it seems, I have seen this happen!

Best wishes, Kate

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