OK, so I have almost completed my first loan modification! I know I promised an update months ago with a list of people to call, but it is just too massive and was a nightmare to update. Again, these modifications are not being approved on a massive scale, the banks are selectively modifying loans only for those who are very well qualified. Those with hardships, income losses or even those who are upside down on their homes will most likely end in foreclosure or bankruptcy. The Government is not demanding the banks do anything for struggling borrowers at this time, they are only recommending a solution. I even heard that B of A and Wells are sending letters to their home equity borrowers saying they are reducing their equity limits. I thought Obama represented the middle class?
Anyway, so I am working with Indymac Bank, which was recently purchased by OneWest Bank Group. They aquired the banking operations from the FDIC after they had to jump in back in 2008 when panicked clients withdrew close to $1b of cash in a 48 hour period.
Indyamc has a massive call center group, which is their first line of defense, named the loan resolution group. They have a second tier called the loss mitigation group, they are a little more knowledgeable but still bad. Finally, once the "committee" and loan investor have agreed to a modification, you are issued a special agent in charge of your file. They are in a nameless group, like the Special Forces, but most of them seem to know what they are talking about (yes when you call there is a round robin system, even though you are issued your own agent).
How do you get a loan modification approved? First, you must qualify and I do mean qualify. You must prove a source of income via tax returns, pay check stubs or profit and loss statements (self employed). Those with loss of income, etc. your denied right here. You will then sign a 4506T which ensures you are not lying to the bank. After that you must show your current monthly debts via statements (utilities, cell phone, auto, etc.) and those debts minus your gross income create a DTI (debt to income) profile for the bank. Once they have that, they will use their magical calculator to back out your debts from the gross income which leaves an "affordable" payment. They then issue a modification approval based on those numbers. Congratulations!
I know I know I left out the good parts! You will spend the better part of the 90 to 120 days submitting, re-submitting and re-re-submitting your documents to them. If you are diligent (like me) you will call daily for an update, at which time you will spend 4 minutes on hold and once an agent comes on, you will get 1 of 3 responses. 1. We got everything we are working on it, call back in 30 days (lucky you). 2. We do not have your file, please re-fax it to us (oh crap!) 3. "Oh, you need to talk to this other department as they have your file over there." That is the common response and just means, Dude! I am here for a pay check and do not give a sh*t about your circumstances. Also, best of all, if anything changes during the 90 to 120 day process, and yes I mean anything (income, debts, etc.) you are sent a denial letter.
Ok, so who qualifies for one of these mods? Those borrowers who are temporarily late on their payments, those who have an adjustable rate loan, a pay-option loan, or even an interest only loan. Also, those with a hiccup or financial hardship and it can only be a temporary hardship though. Also, those who bought a home and are now upside down.
Who do you call for a mod? Well, I have seen nothing but bad news, horror stories and rip off scams surrounding third party modification vendors, so I would say that if you are in California, the department of real estate has a list of "approved up front vendors" on their site, that is a good place to start. They charge money for these, from $1k to as much as $7k, but if it saves you $40k over the life of the loan then it is money well spent.
If you are a do-it-yourselfer then you can always go to the website of the bank or servicer that holds your loan and they will have a link or phone nunber for you to call. You can negotiate these on your own with some success, I will try to have an update soon detailing the exact process I used (assuming I am successful) and hopefully some more success stories, tips and tricks from clients who have been approved.
As always, make it happen and good luck!
