Mortgage Assumption after Mortgage Modification

by Mandy from Queens, New York and Comments by JP

Ask Kate about mortgage assumption AFTER mortgage modification: Hi Kate, After a long process, I finally got a loan modification from my nationwide bank. I am current with mortgage payments for more than 6 months since the loan mod was finalized. I was always told that after the loan modification was complete (and 2 monthly house payments) my husband would be removed from the mortgage.



Mandy continues... Problem: The cause of my mortgage delinquency was due to a divorce. As part of the loan modification process I submitted my divorce decree, copy of my new deed (transferring ownership from my husband and I to just myself), and supporting income to show I qualify for the loan modification on my own merits.

I signed a divorce agreement, which requires me to remove my husband from the mortgage. But now, I am going in circles with my mortgage lender.
  1. The Loan Modification Department tells me to speak with the Loan Assumptions Department.

  2. The Loan Assumptions Department tells me they don't deal with loans that went through the loan modification process.

  3. They advise that I should call the Refinance Department to refinance.

  4. The Refinance Department tells me I don't qualify for refinance and must wait several years before I can qualify.

  5. After going back to the Loan Modification Department again I keep getting the "runaround".
Here are my questions:
  1. Do you have any advice how I can get my husband off my mortgage? Is there someone to contact at Fannie Mae or my bank?

  2. Is there a bank that will do a refinance for a loan modification case (i.e. a HARP program and not a sub-prime mortgage with exorbitant fees)
Any other suggestions?

Kate Answers: Mortgage Assumption AFTER Mortgage Modification

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear Mandy,

I actually think you are the poster child of loan assumption.

You understand removing a homeowner from title using a deed versus removing a borrower from the mortgage through assumption.

This is the difference between owning a home and owing on a mortgage, asset as opposed to liability!

Mortgage Assumption AFTER Mortgage Modification

The runaround you are receiving makes the banks look like blithering idiots.

But here is where I wonder if the ball was unwittingly dropped. Was it put in writing that you would be able to assume the mortgage after the loan modification was complete and you had made 2 monthly house payments?

Now if it looks like I am pointing my finger at you, please know this is not the case. Had you attempted to squeeze out a written agreement to follow the loan modification with a loan assumption, I truly doubt how far your transaction would have gotten.

Sidebar: The $25 billion bank settlement announced in February, 2012 was not due to big banks' ethical and legal treatment of struggling homeowners.

But without anything in writing, homeowners simply can't rely on banks' verbal communication. Without written agreements (and without a dose of very good fortune), you may as well kiss goodbye any verbal commitments.

Mortgage Assumption Help

Now, to answer your questions... where can you turn for help. You could continue your run around the bank's circuit, hoping one phone call might land with an employee who understands the definition of accountability. But this is time consuming and frustrating.

You could ask your divorce attorney to put pressure on the bank, however I understand the cost involved might nullify this option.

How to Escalate Making Home Affordable Help

Regardless of whatever else you do, I hope you will make this call to 888-995-HOPE to speak with a HUD Counselor.

It's important when you call to ask for MHA (Making Home Affordable) Help. This will escalate your case.

They are available 365 days a year and 24 hours a day to help homeowners for free, but I can only imagine they are flooded with calls. So experiment with trying to get through during off-peak hours.

Be sure to ask where to turn for help if this isn't within their scope and look at this phone call as your first step.

Refinance AFTER Mortgage Modification

Switching gears, refinancing in lieu of mortgage assumption after loan modification isn't going to be fun because of the ill-effect on your credit scores.

Banks feel they are coerced by the government into offering loan mods. So with the likelihood of reducing credit scores, they hope to give pause to homeowners contemplating HAMP.

My only suggestion is to try an FHA refinance but you may have a waiting period due to the mortgage modification. In any event, go to How to unlock the code of FHA Loan Requirements for more understanding of FHA.

You can find more help regarding HAMP and divorce issues at these Ask Kate letters: Good luck and best wishes,

Ask Kate
P.S. I hope you will keep me updated after calling the HUD counselor.

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FHA Assumption after Modification
by: Jackie P

As you can see, I posted previously because I was in research of how an assumption of an FHA loan can happen after a modification.

I'm writing here ONLY to give hope to other families/individuals going through the same ordeal that I did. It so happens that I'm a RealtorĀ® and I work with lenders all the time during the purchase process, and at the same time I have processed many short sales so I have worked with many families experiencing hardship, and dealing with mortgage lenders in approving short sales.

The circumstances with my personal situation were as follows: I purchase my home with my ex fiance with an FHA loan in 2009. Early 2011 my fiance and I decided not to move forward with our relationship which resulted in my inheriting the hefty house payment. I basically lost his income and paying the mortgage on my own. Both of our names were on the loan and deed to the home.

I tried numerous times to assume the loan with my income alone and I did not qualify due to income qualifying reasons. Right after I was informed of this I received the news that my daughter had a very bad medical condition/tumor. I could not continue making the payments on my mortgage. I first contacted a credit counseling company because I didn't want to lose my home. I didn't think a modification was possible because I assumed that the lender would still continue to count my ex fiance's income and would deny the modification. I learned from the credit counseling agency that it would be possible for me to be considered for the loan modification with my income alone since I LOST my ex fiance's income. Sure enough I got the modification completed about a year later with ONLY my signature and with ONLY my income considered.

Since I'm in the business I knew FHA loans are assumable. I was first informed by my lender that it would be possible that a modified FHA loan can be assumed. Well this was a big error on their part because this had never been done. Needless to say I pursued getting the assumption after the modification was complete, and I kept getting denied. I was told that the ONLY way to assume the loan (even though my name was on it and it was modified based on my income alone), was to assume the loan under the old/original terms. Of course this wouldn't help (with the old payment), that's why I got the modification. You see my name was on the loan originally. I was not trying to pass on my hardship/modified terms to someone else other than to just remove my ex fiance's name from the mortgage. I was having a hard time understanding where in my modification papers/when I signed them I gave up my rights to assume this FHA loan. There was no language to the effect. After countless hours/phone calls/months I contacted HUD and they basically took my case and informed my lender that they had to give me the opportunity to assume my loan "under the modified terms" and instructed them to follow the underwriting guidelines.

Well, I'm happy to say that I finally accomplished this. I know there must be families experiencing hardship, and I want to give you hope.

Assumption after Modification - FHA (JP's 2nd Comment)
by: JP

Kate, yes my ex-fiance has not only signed documents stating I can assume the loan, but he also signed a Grant Deed of the property to me. In order for my lender to process the loan modification using ONLY my income, my hardship, and execute the loan modification papers with my signature only it was required that he sign the Grant Deed.

Hi JP, Kate here...

I know I'm singing to the choir but the bank's inability to see past their own nose is mind-boggling. It's not right that they have this much power.

So I'll say it again. Make your voice heard in Washington DC! Go to Will Fannie Mae Allow True Mortgage Modifications, then scroll down to the comment section for 4 Quick and Simple Ways Homeowners Can Make Their Voices Heard and Bring About Change.

Kate

Assumption after Modification - FHA (JP's 1st Comment)
by: JP

I'm going through the same headache as Mandy. My modification is complete.

The difference between her case and mine is that the borrower on my loan and I were never married. My name is on the loan. I was qualified for the modification based on my income alone and the bank required ONLY my signature for the execution of the modification papers.

I was the one with the hardship. The lender originally told me that I could assume the loan within 60 days after the modification was complete. Then the story changed to the loan is NO longer assumable since it's been modified.

I explained that I'm not trying to pass on the benefits of my modification to someone else but me. All I want is my ex-fiance's name removed from the loan. I have contacted HUD at 1-877-622-8525. They have opened a case and are investigating. If anyone has additional information, please let me know. Thanks!

Hi JP, Kate here...

Can these banks get any more stupid? I could also add incompetent, arrogant, and disorganized. Take your pick.

That was a smart move to contact HUD!

Has your ex-fiance contacted the bank to give his okay to the assumption? His voice might carry more weight since he did not sign the modification papers.

In fact, I am not sure how the bank approved the modification without his written consent.

I'm really getting tired of the banks. I hope everyone will work at paying off their mortgages to beat the banks at their own game. You can read more about this at The Mortgage Freedom Project.

If anyone has pertinent information for JP, please add a comment here on this page.

Best wishes, Kate

P.S. By the way, I just got to your original letter right now. Because of the excellent details you provide, I am printing part of it here. If anyone reading this has assumed a mortgage after their loan modification, please comment here with details. Thank you, Kate

Kate, when I applied for the loan modification B of A did tell me I could assume the loan after the modification was complete. I went back and forth with the Modification Department, and Assumptions Department, and the Office of the President.

I got so many different stories. The very first story was that my loan could not be assumed because it was modified. Then I was told that a simple assumption could be done but I would have to make 12 payments on time. (I have this in writing from the Office of the President of B of A).

Then I was told my senior management that the 12 month wait was waived. I was asked to submit an application to assume the loan which I did including all the supporting documentation. Then I was declined because again the loan could not be assumed after modification.

Any other thoughts on where I can reach out for help? I appreciate your time. JP

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