A recent study found that of people who had lost their home of foreclosure, around half never called their mortgage servicer or lender to discuss options for saving their home. There are potentially plenty of options for saving your home if you just reach out to the mortgage servicer. When you’ve gathered up the necessary documents – refer to BALANCE’s Mortgage Modification Document Checklist - and you’re just about ready to make the call, review the following list to put yourself in place for the best possible shot at working out a way to save your home. After the servicer has told you whether or not they will offer you an immediate modification, use the post-decision information below to follow to continue to navigate the process successfully.
- Contact your servicer immediately as soon as you are aware that there will be a problem making your mortgage payments.
- Keep a log of all contacts that includes date and time of call, person talked to, and what was discussed, requested or offered.
- Start a file of all documentation related to your attempt to keep your home.
- Try to call the servicer when you are close to a fax or scanner and computer with internet connection. This will allow you to send documents quickly and get you closer to resolution.
- Ask to speak with the “Loss Mitigation Department” at the servicer about possible workout options.
- Get a name and phone number for a specific person in Loss Mitigation so you have someone to talk to directly when you call back.
- Make sure you are clear with them about your situation and what you want to accomplish.
Answer all questions as honestly as possible, since doing so will put you in better position to succeed in the long-term.
- Ask for information on and applications for any workout programs that might assist you.
- Keep a calendar of deadlines from the servicer and meet all the obligations they set forth.
- Contact a certified housing counselor, like the ones at BALANCE, if you want impartial views on the process and your options.
- Be persistent. If you don’t get an answer right away, hound them until you do.
- Don’t agree to anything that you haven’t seen in writing or aren’t sure you can afford. If you aren’t sure, talk with your housing counselor. Don’t be afraid to counteroffer.
- Always respond to calls or letters from the servicer.
- Follow up on requests you have made of the servicer.
- Any information sent to the servicer should be sent certified mail with delivery confirmation. Keep the delivery confirmation slips in your file.
- Try not to take offense at any suggestions the servicer makes for ways you can cut expenses or generate more income. It is in their best interest to help you stay in the home and they want to make sure they are just exploring all options for doing that.
- Stay in your home during the time you are pursuing a workout on the mortgage, since moving out could disqualify you for certain types of help from the lender.
- Ask what timelines have been set by the servicer for completing a workout and how this relates to possible foreclosure proceedings. Ask if a foreclosure sale date has been set.
- Make sure the servicer is always aware of any changes that have happened in your situation, such as picking up extra income or getting a new job.
- Ask how many months the servicer considers you behind, and the exact dollar amount they think you owe.
- If you are not sure, ask if your loan is owned by Freddie Mac or Fannie Mae as there may be additional options available to you if that is the case.
What to do if you’ve been…
Approved for a modification:
- Assume that unless the lender sends you an agreement in writing, the offer is not official.
- Ask when final documents, such as a new mortgage contract, will be mailed to you.
- Confirm how long you are allowed to review the lender’s offer before it expires. If it does expire, you will likely have to reapply.
- When you receive the lender’s offer, check it against your budget to make sure it will work for you. A BALANCE counselor can help with this process.
- Do not be afraid to counter or deny an offer if it doesn’t help your situation. In fact, sometimes you may be doing yourself a disservice by accepting. With most lenders you can only get a loan modification once in a 12 month period. Make it count.
- Make a copy of any agreement the lender asks you to sign and insist that they sign the agreement as well. Only send signed agreements via certified mail with return receipt.
- If you are told by the lender not to make a payment while their offer is finalized, ask to get a copy of that in writing as confirmation. Just in case, set aside the money you would have otherwise given to the lender until everything is final.
Declined for a modification:
- Call to confirm the specific option you were being reviewed for and the reason why you were denied.
- Even if you’ve been denied for one option, that doesn’t mean you’re not in review for something else. Ask if your file is in active review and confirm the option the lender is looking at next.
- If you are told it’s due to missing documents, make sure none of the items you sent were rejected. A form could be rejected if it was completed incorrectly. In this case, ask for step-by-step instructions on how to fill it out.
- Ensure that a decision was based on the correct budget. Have the lender confirm the totals for these categories: gross and net income, expenses, assets and property value. Make sure those match your records and the budget you prepared.
- If you were denied for a short sale due to your property’s value, do not pay for an appraisal. Instead, ask your realtor to submit “comps” to the lender based on similar properties in the immediate area.
- Do not reapply for the same option before speaking with your BALANCE counselor. If your case is the same as before, chances are the outcome will be similar. Our counselors can figure the reason you were denied into a plan for next steps.
- If you want to dispute your lender’s decision, do it as fast as possible. Ask if they have an appeals process and how it works. Confirm where supporting documents should be sent and do so using certified mail or keep your fax confirmation.