Don’t they HAVE to modify my loan?

[Aleena]

Hi all,

I have been reading these forums and have learned so much! This is my first post so please forgive me if I leave anything important out.

We purchased our home in Oregon in Jan 2005 for 369,000. At the time we did an 80/20 loan with First Horizon. The first was later sold to Met Life Home Loans. The first rate is 6.25% (I think) and the second is 7.25%. Payment on my first is $2096.00 and the second is $535.

In 2007 my husband left his job to go into a landscaping business with a long time friend. Well this turned out to be a terrible mistake once the housing market crashed. Last year business slowed down considerably and we were supplementing with Savings, credit cards to be able to make our payments. In the same time period my mother was diagnosed with stage 4 lung cancer and money was used to help with her health care (she lives with us).

By the time October 08 rolled around it became quite obvious the business was not recovering. My husband went on unemployment. I called my first to tell them we were in trouble and was told they couldn't even discuss anything with me unless I was at least 60 days behind. I struggled with this and kept paying out of savings. I have never really been late on anything. I cashed out my 401k. My husband had loans accumulated through the business but in his name which he stopped paying on.

December came and the savings was nearly gone. I did not pay the first or the second. I called and called and held for hours just to get the run around. I spent two months trying to get a mod packet before I finally found one online and sent it in. I got a notice they received it and I call every week. They always tell me it is an open task and has not been assigned. They never call me back when I leave messages. They never ever initiate a call to me. They have not initiated a foreclosure yet but have told me nothing. I sent the hardship letter and all necessary paperwork back in March but it has not been assigned to anyone yet. I did learn my first is secured by Fannie Mae which I think is a good thing right? I talk to my second every other day and they are really quite nice for the most part.

I live in a cul-de-sac neighborhood of 14 homes. Thus far 1 has already foreclosed last year, and 4 more are up for foreclosure auction in the next two months. The house that foreclosed was sold by the bank this past fall for 235,000 and it is a reasonable comp to mine. There is one they have on the market for 279,900 but is is not moving anywhere. I suspect my home to be worth maybe 260,000 now if we are lucky and the first on it is 276k still. The second is wholly unsecured.

My husband and I will both be claiming bankruptcy in December (he has a previous BK from 7 years ago). He has debt tied to the business which we now cannot pay and I have 20k in credit card debt. Mostly from trying to hold things together when we lost my husband’s income and gained my mom’s medical expenses.

Would my second consider settling? They wont talk to me until my first is current. I do have a stable job where I make a decent living. I estimate I can afford $1700 per month for my home. Is there any hope for me? I love my house and would do just about anything to keep it. I don’t want the emotional distress on my mom or my 4 year old son. Sometimes I can’t sleep at night because I just can’t stop crying. I don’t want to lose this place. It is the only home my son has ever really known. He has friends and my mother has a garden she loves.

Do I need a lawyer? Could I even afford one? I am saving the money I am not paying the mortgage company but won’t I need that to catch up my loan? Will they add past due payments to the end if I can get a mod?

I am just so lost anymore. My husband’s prospect of getting a decent job is pretty grim. Unemployment in my area is at 12% and the competition for jobs is insane. I need to be able to afford my house even if he can only get a minimum wage job. Sorry to be rambling. I am pretty emotional today as we just lost one of our favorite neighbors to foreclosure


This past year has just been one nightmare after another

[Social Apocalypse]

I feel for you. We are up here in SW Washington. Pretty much the same story. There are no jobs. The housing market is tanked. My mortgage company doesn't want to help. I have no idea what to do. Good luck to you... and to me too!!

[Moe Bedard]

Hi Aleena,


Welcome to the forum and thank you for joining.............


Where in the process are you at this time..............have you approached the lender and asked about modifying your loan, and if so, what have they told you? A modification is something that you can do on your own directly with your lender.......

[Aleena]

I will give a quick background without all the sappy details.

State: Oregon (non-recourse state)
Purchase: $ 369,900 80/20 loan in 2005 for full purchase amount
Current Balances (all purchase money on the home, no refi’s):
1^st mortgage with MetHome as the servicer but Fannie Mae as the actual loan holder is currently at 283,000 and change
2^nd Mortgage with First Horizon current balance around 70k
Current expected market value of home: Somewhere around 250k to 270k
Hardships:
My husband lost his job (big income loss)
My mom was diagnosed with stage IV lung cancer (medical expenses)
No raises at my work and I am the sole income.

My current payments including the 1^st, 2^nd and taxes and insurance are 2630 per month. To reach 31% of my gross income my payment would need to be $ 1550.00 per month.

Given that my loan is through Fannie Mae aren’t they required to exhaust all modification options, etc before they can foreclose? I read recently on here that the second must comply as well given the new program or that Fannie Mae has to consider me for Hope For Homeowners.

If the second does not get modified I will gladly file chapter 13 to remove them but I would rather file chapter 7 if possible. We have lots of business related debt for my husband’s failed landscaping business.

Is there anything that will prevent a modification for me? I just hate this purgatory and wish I could have some answers. I have already submitted all the needed paperwork to MetLife but they move so slow that after over 45 days it still isn’t assigned to anyone. Is it true they can’t foreclose until they exhaust modification opportunities?

What will they do with my loan? Are they really going to start using the Hope For Homeowners program now? Would they do that or a modification?

Thank you VERY MUCH to everyone on this site. I have learned so so much from here

[Aleena]

I have sent in both the MetLife modification packet as well as the Hope For Homeowners packet along with a hardship letter. I call them once a week and hold for an hour plus jsut to hear them tell me that it is "In REview" but not assigned yet.

The mortgage has not been paid since December minus a payment of $2100.00 I sent in back in March because I felt terrible about everything.

So not "active" foreclosure has been initiated. I have not received any correspondence from the first except the generic letter saying my packet was received.

I guess I just can't stand the not knowing anything that is going to happen in my life. With everything going on with my mom and my husband I would just like to feel as if one things was going to go right... sigh.

I guess I am just looking for opinions on if they are really "required" to exhaust all modification possiblities. If they have to modify me down to 31% of my gross income I know I can find a way to make it work within my budget.

Thanks,
Anna

[Moe Bedard]

They would need to look at all options...........but not everyone will meet the criteria for the modification..................and in a case like that they will look into other options.

[Aleena]

Beyond the hardship and upside downness of my loan what other qualifications do I need to meet? I assume you have to have stable income on a level that is reasonable.

I just am wondering what kinds of things would disqualify me. It is a single family primary residence. I don't own any other real estate...

What are the reasons they disqualify you?

Thanks!

Anna

[LHarveyMadman]

Aleena,

Remember that participation in the Making Home Affordable plan is voluntary on the part of the lender. If your lender does not want to accept the incentives that the government is offering to participate in this plan, then they are under no obligation to do so.

I checked the Making Home Affordable website, and neither First Horizon nor Met Life are listed as participating lenders. Until they decide to go along with the guidelines set forth by the President, then they are free to establish their own criteria for granting modifications.

Making Home Affordable -Contact Your Mortgage Servicer

[Aleena]

But they are just the servicer on my first. I checked on the Fannie Mae website and they do have a record for it. So that makes them the guaranteer on my loan correct?

The loan was a standard 30 year fixed.

If I read their site and here correctly that makes my loan owned by Fannie Mae right? Or am I confused here?

[Aleena]

When I go to the Fannie Mae site here:
Does Fannie Mae Own Your Mortgage? Loan Lookup Tool

It finds the match for my house:

"Based on the property information entered, it appears Fannie Mae owns a loan at this address"

MetLife Home Loans confirmed this to me over the phone. So doesn't that mean then that MetLife is only the servicer of my loan where as Fannie Mae actually OWNS my loan?

Sorry I get confused on this

Since I do indeed have a Fannie Mae loan doesn't that mean their participation is mandatory?

[Hopefull2009]

Who was the lender on the loan?

[Aleena]

Originally when we signed the loan we went into First Horizon. But I still don't really get the servicer versus owner thing. I do know that MetLife (who took it over from First Horizon at some point last year) told me over the phone that I "had a fannie mae loan". I went to the fannie mae site and they have a match for my house.

So according to their site they own it.

So what is the difference between owner and lendor?

[Aleena]

So according to Fannie Mae's site

To ensure borrowers currently at risk of a foreclosure have the opportunity to apply for a Home Affordable Modification, Fannie Mae servicers have been directed not to proceed with a foreclosure until a borrower has been evaluated for the program.


So they have to at least evaluate me and I believe I meet the criteria
Hardship: oh yeah
Payment to Income: 45% right now!
In danger of foreclosure: yup got that covered!

Sorry I am just trying to play out scenarios in my head here and I think that if I have a Fannie Mae loan (no matter who services it) they have to offer me a modification that brings my payment to 31% of my gross income per month which is $ 1430. I believe I can figure out a budget to totally make that work.

I am hoping "something" can happen on the second but if not I will file the Chapter 13 and it is gone in 3 to 5 years no matter what if I understand that correctly.

What am I missing here that I should be thinking about? I have been so depressed lately that I am afraid I have convinced myself things will work out when they won't

[LHarveyMadman]

I understand the confusion, and it's difficult to explain. Your loan is backed by Fannie, but it serviced by another entity.

It is up to the servicer or lender to decide whether they will voluntarily participate in the Obama plan. Some lenders have said yes, others have said no. Fannie Mae and Freddie Mac do not dictate terms to the servicers. If the servicers agree to participate, then they have to follow specific guidelines as laid out by the Making Home Affordable plan. If the servicers do not participate, then the fact that your loan is backed/owned by Fannie is immaterial, and Fannie cannot force the servicer to consider your loan for modification.

***, the original press release from President Obama more clearly indicated the voluntary nature of this program. I can't find the text of the press release. Can you provide a link?

[LHarveyMadman]

I found this link to a document that first came out on February 18, when President Obama first announced the plan in Arizona.

http://media.npr.org/documents/2009/...onsumer_qa.pdf

From question #10 under the second section (for those facing foreclosure):


Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

[Aleena]

Now I am doubly confused. Here I thought maybe this was a ray of hope


the administration said it is now requiring servicers to offer troubled borrowers access to Hope for Homeowners as a modification option if they qualify.

I am trying to remember what else I had read that they had to at least offer me a modification because it is a fannie mae loan.

[LHarveyMadman]

Again, this might be a requirement for servicers that are participating. But I can see how that statement could be interpreted as you have.

I would recommend trying to go to a source document (that is, something directly from the government, not a news story) to see if you get any clarification.

Both HOPE and MHA are voluntary participation programs on the part of the lender, at least that's the way things were when I last tried to understand the programs in depth.

[Hopefull2009]

Originally Posted by Aleena

Now I am doubly confused. Here I thought maybe this was a ray of hope

Aleena - Maybe you can call Fannie Mae direct for guidance or information. On their website, they state

All servicers must participate in the program for all eligible Fannie Mae portfolio mortgages and MBS pool mortgages. Servicers may also elect to participate in the HMP for other qualifying mortgage loans that:

• Are not subject to a Fannie Mae's credit loss guarantee; and
• Are held by servicers in their own portfolios or are serviced by servicers for other portfolio or securitization trust or investors.

You say you have submitted your package already. It may very well be in the works. Keep in mind, a modification process is LONG in the ordinary circumstance.

[Aleena]

Hopeful thank you thank you! I think that was the article that gave me the thought that it was mandatory! Like I said maybe I am iinterpreting it that way to save my own sanity or something. This whole part is what made me believe maybe they had to consider me for modification:

"Under the HMP, servicers will use a uniform loan modification process to provide eligible borrowers with sustainable monthly payments. The HMP implementation guidelines set forth in this Announcement apply to all eligible one- to four-unit owner-occupied properties securing
Fannie Mae portfolio mortgages and MBS pool mortgages guaranteed by Fannie Mae. The HMP will replace the Streamlined Modification Program introduced in Announcement 08-33 and the Early Workout™ program announced in Announcement 08-31. The HMP will expire on
December 31, 2012.

All servicers must participate in the program for all eligible Fannie Mae portfolio mortgages and MBS pool mortgages."

this is the full link
https://www.efanniemae.com/sf/guides.../2009/0905.pdf

Am I just seeing something there that isn't?

Thank you again so so finding that hopeful. I have read so much lately I can't keep things straight!

[snapple candy]

Aleena,
The bottom line is no matter what language you see that looks like they have to modify your loan, the fact is the underlying regs still dont require them to do anything. Its legaleeze that makes the package look all pretty like you are going to be helped. I have Fannie mae backed loan and I am being foreclosed upon so it appears it doesnt really mean anything to have one other than it gives serviceers whom do want to modify an ability to streamline the process...at least so I hear. Hang in there an keep your fingers crossed. I have been waiting 11 mths. Getting your loan just reviewed is a major accomplishment that can take months.

[Hopefull2009]

Originally Posted by Aleena

All servicers must participate in the program for all eligible Fannie Mae portfolio mortgages and MBS pool mortgages."

this is the full link
https://www.efanniemae.com/sf/guides.../2009/0905.pdf

Am I just seeing something there that isn't?

Thank you again so so finding that hopeful. I have read so much lately I can't keep things straight!

LOL - yeah, it's there. You weren't seeing things. I think the confusion comes in with the "participating lenders/servicers." I think you should call Fannie Mae and ask for clarification. I think the issue comes in with the servicer and the contract they sign to participate which would allow them to receive their gov't incentives. I think (not positive, but from reading) the refinancing portion under this plan allows a borrower to go to a participating lender if their servicer/lender isn't participating in the program and they have a Fannie/Freddie backed loan.

I'd probalby start with Fannie Mae first to get a lot of your questions answered and then probably keep pounding on your servicer's door? It's definitely frustrating and with the confusion on the lenders/servicers part in addition, doesn't make for a smooth, hassle free process.

[LHarveyMadman]

I agree, the language of that more recent document seems to indicate that your lender is required to consider your loan for modification. But if this were really the case, then why does the Making Home Affordable site still have a lookup tool for participating providers? If it were mandatory, then such a tool would be unnecessary. And later in the same document, it says, "All Fannie Mae approved servicers are eligible to participate in the HMP without obtaining prior approval from Fannie Mae." This makes it sound voluntary, and not required.

The same document again talks about "incentives" to the lender/servicer to modify loans. If lenders/servicers were required to modify loans owned by Fannie, then these wouldn't be called incentives.

To second snapple candy's bottom line, Aleena, is that there's a lot of confusing and conflicting information. I can definitely see your point of view, and I hope you are right. But I have to believe that if the government were truly forcing all lenders to modify loans backed by Fannie, we'd be hearing a lot of bad press about it.

One last thing: even if all servicers are required to participate in MHA, they are not required to modify every loan.

[Hopefull2009]

Originally Posted by LHarveyMadman

I agree, the language of that more recent document seems to indicate that your lender is required to consider your loan for modification. But if this were really the case, then why does the Making Home Affordable site still have a lookup tool for participating providers? If it were mandatory, then such a tool would be unnecessary. And later in the same document, it says, "All Fannie Mae approved servicers are eligible to participate in the HMP without obtaining prior approval from Fannie Mae." This makes it sound voluntary, and not required..

I agree with this, LHarvey. Aleena, also remember -- the MHA program is still new. Lenders/servicers are still signing contracts. The program isn't set to expire next week. In fact, it will run until (I believe) 2012. If your servicer is stating they are not participating now, they may be in the process of still reviewing and deciding whether to sign a contract. I'm with Aurora and on April 9th I was told I was not eligible (I don't have a Fannie/Freddie loan) because they were not participating "at this time." They signed and were added to the participating lenders list the other night, and now finally I was offered the trial payment period (just waiting on the package to arrive).

Don't throw in the towel just yet. It may just be a matter of timing. Believe me, I never in a million years figured Aurora would show up on that list so soon.

I'd still call Fannie Mae and ask your specific questions to them and then go from there.

[Aleena]

True to all things said above but I will take what Ican get in thee hope category right now. I think if you read further participation for non-fannie mae backed loans by servicers is voluntary though strongly recommend. In the document I think they refer to loans that are with a servicer of fannie mae loans but NOT a loan backed by Fannie Mae as Non-GSE mortgages.

Servicers may also elect to participate in the HMP for other qualifying mortgage loans that:
are not subject to Fannie Mae’s credit loss guarantee, and
are held by servicers in their own portfolios or are serviced for other portfolios or securitization trusts or investors.

I think that participation by servicers for these loans is currently up to the servicers disgression but from reading the document they at least say a lendor must consider a fannie mae loan for modification before they can go forward with a foreclosure.

I know there are no guarantees but this all certainly sounds like good news!

snapple candy: This annoucement was just made end of april so maybe it is hope for you too then!!

Anna

[Aleena]

Originally Posted by LHarveyMadman

I agree, the language of that more recent document seems to indicate that your lender is required to consider your loan for modification. But if this were really the case, then why does the Making Home Affordable site still have a lookup tool for participating providers? If it were mandatory, then such a tool would be unnecessary."
.

I think the servicer list on the Making Home Affordable site applies to loans not owned by Fannie Mae. Again the date on this is so recent I am guessing not all available info has been updated. But the annoucement was directly from the fannie mae site so at least it is reputable information.

I like being optimistic