[janicem]

As a loss mitigation professional, can you tell me what is the criteria lenders use to determine if someone qualifies for a loan modification versus a temporary forbearance or determining that a mortgagee simply can't afford their home anymore? For example, is a lender more likely to determine that a modification is warranted if a loss of income or a new expense is permanent or temporary? Any thoughts you have would be very helpful -- even if you can just point me online to some other information.

In addition, I did see an article online that states the FHA requires commercial lenders to try to avoid foreclosure through loan modifications, etc. (see below). How far does the lender have to go in these attempts? Is the difficulty one encounters in getting responses, documents from the lender due in anyway to this obligation? For example, for several months, Wells Fargo has been saying I'm to receive some "paperwork" but in the meantime, I've received nothing, not even my regular monthly statements, and this is impacting my credit report. I'm guess I'm asking if WF would stall purposely to put me in a worse financial situation?

Part of Online Article:

The Federal Housing Administration, which insures loans from a list of pre-approved commercial lenders, has mandated since the late 1990s that all its lenders follow strict loss mitigation protocols. If a borrower begins to default, lenders must make direct contact and offer to waive fees, reduce interest rates or fix them, apply partial payments to the amount owed, and come out with a loan modification that keeps the borrower in the home. Foreclosure proceedings are allowed only after all other options have been exhausted. It's a proven strategy and one that has made FHA-backed loans among the most coveted in the country.

Commercial lenders, however, have been scrambling to assemble loss mitigation departments. And even when they do, nothing is mandatory, and the small staffs are poorly trained. The initiation of foreclosure filings remains at the discretion of the lender - a few days after default, or a few months - regardless of the borrower's condition or the lender's efforts. Actions that would alter the loan itself, like fixing or reducing interest rates, or waiving a portion of the principal balance, aren't usually considered.
Instead, servicers often go the route of suspending monthly payments until a borrower regains financial footing or spreading out past-due payments over a period of months - things that do more to maximize a failing loan's cash flow than to help the debtor keep his or her home.