How to Modify Your Mortgage

by Pam in Florida, Scott G. in Tennessee, by Mary R. in Tennessee, by Eddie...

Ask Kate how to modify your mortgage with less confusion: Pam is uncomfortable with the terms of her HAMP loan modification. Scott's income plummets after kidney failure leaving him wondering how to modify his mortgage. Mary can't finalize her modification because of a co-borrower. I straighten up a well-meaning friend's tipsy-turvey advice about HARP, HAMP, and FHA streamline refinance that's confusing Eddie.


Question 1: Uncomfortable with HAMP Loan Modification Terms

By Pam from Pinellas County, Florida

Kate, I have been approved for a HAMP loan modification through Bank of America but feel uncomfortable with the terms.

Ask Kate for HAMP home loan modification help.
BOA has extended the life of the loan, increased the balance, and added various fees and amounts.

It has taken them ten months to approve, destroying my credit in the process. I am sorry I ever began the process with them and wish I had just sold my home or refinanced through a normal process.

I do have an FHA mortgage and the modification has reduced my monthly amount by $200. Do you advise I sign or try other avenues. Thank you,
Pam in Florida

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Uncomfortable with HAMP Loan Modification Terms

Hi Pam,

Assuming your mortgage is underwater, you'd need a short sale if you choose to sell your home without bringing in additional cash to pay off your loan. So even though you are rightfully frustrated, don't burn your bridges with Bank of America. You'll need them for the real estate short sale process.

Did you try HARP refinancing before going the route of HAMP? Of course getting loan approval might be a challenge depending on the extent of the credit damage, but with HARP 2, you can shop lenders and rates.

Before terminating your loan modification agreement, sit down and go through your budget. If you can't afford to keep your house without the modified mortgage payment, you might need to pick your poison... inferior loan terms or no longer owning your home.

Read more about HAFA short sales and other Making Home Affordable Programs. Follow the links on the page to even more of my information.

Best wishes for your home,

Ask Kate

Question 2: Refinance after Becoming Disabled

By Scott G from Louisville, Tennessee

Kate, Shortly after getting new mobile home my kidneys failed and no longer work. Income sliced by more than half. Can we get hardship modification and if so how to do it. Mortgage company is Vanderbilt. We have a 17 percent interest rate which I think is too high.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Refinance after Becoming Disabled

Hi Scott,

Making Home Affordable includes manufactured homes in the HAMP program:
"Manufactured housing (the first lien mortgage loan must be secured by the manufactured home and the land, both of which must be classified as real property under applicable state law)."
Loan modifications go through loan servicers vs HARP 2 refinances that allow shopping among lenders and comparing interest rates. So call Vanderbuilt and ask how to get started today.

Here's a list of required paperwork to streamline your HAMP application process.

Best wishes for your health,

Ask Kate

Question 3: Loan Modifications and Quit Claim Deeds

By Mary R from Pleasant View, Tennessee

Kate, I started an in-house loan modification in March of 2012 with Wells Fargo. I got the final paperwork for the permanent modification, signed, and sent the requested check which was cashed.

Wells Fargo changed their mind a week later, stating they needed a signature of my co-borrower even though I have quit claim deed.

Yet, they had told me from March to August their signature was not needed as I had a quit claim, the other person has not lived here in a year, and has no interest in the home.

Is there anything I can do? They said I could not apply for HAMP as her signature would still be needed. I am now facing possible foreclosure. Thank you.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Loan Modifications and Quit Claim Deeds

Hi Mary,

I'm not surprised that the bank won't accept a quit claim deed in lieu of a borrower's signature on the modification paperwork.

Quit claim deeds, depending on the state, are used to remove or add an individual to title. But they do not add or remove a borrower from the mortgage.

So even though your co-borrower gave up rights to the ownership of your home through a quit claim deed, she remains obligated to the bank to repay the mortgage. This is why the bank needs her signature to alter the terms of the loan.

On the other hand, it does surprise me that someone at Wells Fargo gave you the impression that your modification could be finalized without the co-borrower's agreement. I'm guessing once someone in authority reviewed your file in detail, it was noticed that you still had a co-borrower.

What can you do? Offer to pick her up and take her to the notary for signing. Or you could let her know if without her signature, you will go into foreclosure and since she is still obligated to the bank, her credit will be adversely affected.

As long as your co-borrower remains on the mortgage, modifying or refinancing will be complicated for you. Even selling the house. So if she is cooperative, ask the bank to remove her from the mortgage during the modification.

Go here for more details on quit claim deeds: Quit Claim Deeds: Mortgage vs Title.

Best wishes getting the cooperation of the co-borrower,

Ask Kate

Question 4: FHA Streamline under HAMP

By Eddie in USA

Hi Kate, a few months ago, someone informed me that FHA HAMP streamline program had a no qualifying HARP for people who where up to 12 months behind on there mortgage payments, with a 3.5 rate on 30 and a 3.0 rate on 15 year loans. Now I can't find it anywhere. Am I crazy or was I dreaming?

Please let me know, Thanks, Eddie

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: FHA Streamline under HAMP

Hi Eddie,

Whew! The lingo is confusing, isn't it? You are actually talking about 3 different loan programs and a recently added guideline that pertains to only one of them. Let's see if I can straighten out the mortgage terminology.

Follow the links to my information on the...
  1. FHA HAMP modification program

  2. FHA streamline refinance program with reduced documentation

  3. HARP refinance program
HARP recently added a no-income qualification guideline to streamline the process for qualified borrowers.

HAMP and in-house loan modification programs are accessed through the current lender. Call yours today and ask about your modification options. You can use any participating lender for FHA streamline and HARP refinancing.

Best wishes finding your appropriate options,

Ask Kate

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HAMP Modification Program Lump Sum Payment
by: Homeowner in Portland, Oregon

Hi Kate, In 2010 I qualified and received the HAMP home mortgage modification with a great amount of diligence. The program has been a god send for me and I have been able to make my mortgage payments each month.

My question is what happens to my modification program if I put a lump sum payment on the principal? My parents are quite elderly, hoping they day never comes, but when it does I will have a opportunity to put a considerable of money towards my mortgage.

It will not be enough to pay it off but will bring it down to under 80K, its currently around 230K. Will I still be able to keep the modification as my income has not changed? Will my payments remain the same? Hoping this will just shorten the length of the loan?

Hi, Kate here...

I'm so happy to hear that you've benefited from a HAMP modification!

Most mortgage programs allow lump sum payments to shorten the term of the loan.

But I can't tell you for sure. Modifications are a peculiar animal being based on hardship. I can't be certain of your specific terms. So you'll need to get out a magnifying glass to read the fine print in the loan agreement v-e-r-y carefully.

It will be worth your time. If a lump sum payment is not beneficial, you want to know before you fork over the money to the lender.

Case in point, although under different circumstances, is Chris from Chicago, Illinois. He paid down his mortgage balance with a significant sum based on verbal instructions from his lender. Read what happened at Getting Rid of PMI.

I'm not saying NOT to pay down your mortgage. But first read the terms of your paperwork carefully.

Best wishes, Kate

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