My Lender Will Not Modify My Mortgage
by Mark in Virginia and by Ray in California
Ask Kate why your loan servicer won't modify your mortgage. How to get HAMP and in-house modification help: Mark from Round Hill, VA got his mortgage in 2006 but now is $100,000 underwater. His loan servicer does not participate in Making Home Affordable and refuses to modify Mark's interest rate which is at 9.22%.
Ray, a California homeowner, is experiencing health problems which are causing him to retire with less income. Yet his lender insists there is no hardship.
HSBC Won't Modify Our Mortgage at 9.22% By Mark M, in Round Hill, VA
We have a mortgage from 2006 in which we are about $100,000 underwater. They refuse to modify the interest rate 9.22% but they do add deficient interest payments back into the principal to the tune of $50,000 so far.
We also have an IRS tax lien that started out at $25,000 and has been paid down considerably.
The PITI (mortgage principal, interest, property taxes, and insurance) payment takes up 66% of my take home pay each month which is why we fall behind when financial emergencies pop up.
What should we do?
Ask Kate answers: HSBC Won't Modify Our Mortgage at 9.22%
Because of the trouble HSBC is giving you, I looked them up to see if they truly offer mortgage modifications. According to their website they do.
However, they are not listed as a lender who participates in the HAMP program. Not a huge surprise because participation is voluntary, unless a mortgage is backed by Fannie Mae or Freddie Mac, also known as government sponsored entities (GSEs).
So this leaves you at the mercy of an in-house HSBC modification program. You can read more about this at Can I Modify My Mortgage Myself
which I wrote long before HAMP ever existed.
Ask Yourself These Questions
Before you give up, and even if you think negotiations with your loan servicer have hit a dead end, I'd still give it one more try. Explain again why your payment is out of reach. Show them your debt-to-income ratio, mention the negative amortization, the financial emergencies, your IRS lien, etc.
However, if HSBC still won't budge, this becomes a crossroad and you probably need to ask yourself some questions. Can I afford my mortgage? If not, what can I cut back to afford the payment? How willing am I to sacrifice other areas of my life to save my home? Would it be more affordable to rent?
Short Sale and Deed in Lieu of Foreclosure
If you come to the conclusion that you want to fight tooth and nail to save your home, draw up a fresh budget and see if the numbers work with the current house payment.
Or if you decide it's time to cut the cord and move on, call your lender about starting the short sale procedure
. As a last resort, you could try a deed-in-lieu of foreclosure
. But first, you need to determine your priorities as discussed earlier.
Deborah's Fight to Avoid Foreclosure
You will also want to read Deborah's two part story at Short Sale vs Foreclosure
and To Reaffirm or Not to Reaffirm a Mortgage After Bankruptcy
, including the conclusion to her story in the comment section, 'I Choose Peace'.
There is no easy solution when your lender does not participate in Making Home Affordable. The cards are stacked against you, even more so. I hope though that this helps you sort through your thoughts and gives you some direction for your future.
I Need a HAMP Modification but My Lender Says I Have No Hardship By Ray in California
Hi Kate. I just got turned down from my mortgage lender. I was trying to get a modification on just my interest rates. They said I had to have a hardship.
I sent all the information to them i.e planning to retire due to health problems which I explained to them. They said I have to have a hardship first.
This is crazy. They would rather me make some payments late or get to the point of walking away and leaving the house for them than trying to work with me now and keep our house and everything current.
We are underwater and just asking for a lower interest rate.
Boy this is crazy and I don't understand their thinking. Any suggestions? By the way, it does not qualify for a HARP. Thanks.
Ask Kate answers: I Need HAMP Modification
Then I'd write them again... again... and again.
Include all of the doctor bills, diagnosis, retirement documentation. In other words, inundate the loan servicer with verification of your hardship. Make it impossible for them to claim you don't have one.
Write down the numbers for them... your current income, your debts, how much your income will decrease upon retirement. Project the cost of addressing your health problems. Leave no stone unturned.
Next Call a Free Housing Counselor
If there is no response, call a HUD housing expert at 888-995-4673. They are trained to handle these problems. Be ready to explain the trouble you are having with your loan servicer very concisely. When they answer, ask immediately for MHA help. This will get you more attention.
Before you call, read more about Making Home Affordable counselors
. By the way, their help is free.
But should your mortgage be backed by Fannie Mae or Freddie Mac, you should know this. Neither of the GSEs have a hardship requirement any longer. Read the news in the HAMP 2 Modification announcement
Beware of Modification Scams
And one final word. When homeowners are feeling desperate, any help might seem okay. Please beware of that there are scams that seem like genuine help. To protect yourself, read more about the HAMP Hardship Loan Modification Scams
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