Expert: Ontrack Financial Group llc - 6/15/2009

Question
Hi There,

In March, we applied for a loan modification with our lender. Not only did we fax in the information but we spoke to them over the phone and they took down our information and told us that we qualify for a loan modification. They asked us to fax in more paperwork and we did. They said we would be notified by Fannie Mae in 30-60 days. We called back to check the status and they had lost the paperwork we had faxed to them and they asked us to refax it, so we did. We called back again and they said they are still waiting on Fannie Mae to return the information for the loan modification. Now we have just been served with a Lis Penden as if we are not in the middle of a loan modification. We have done everything they have asked, we have offered to make partial payments until the loan modification goes through, they refused and said they do not accept partial payments. We told them the longer they wait to get the loan modification to go through, the further behind we were going get. We did not want to get far behind. The only thing thing they keep telling us is there is nothing they can do until Fannie Mae gets back to them and us. But now they file this in court while we were trusting they were getting this put through. They told us that our late payments would be put back into the loan and we would have a lower payment. My question is what can be done in this situation? Do lenders usually file papers in the middle of this process? Thank you for any information you could give!

Answer
Dear Tina,

You like so many other consumers are having a difficult time modifying their home loans.  On one side everything looks great as documents are send back and forth.  On the other side the bank continues to move forward with foreclosure, or slows the process.  


1.  Continue to make payments to the home (as much as you can, remember food comes first).

1.  Make sure you receive documents stating the loan modification process started.

2.  Make sure Fannie Mae holds your loan http://loanlookup.fanniemae.com/loanlookup/

3.  Contact Fannie Mae and ask what the hold up is


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If you are not eligible for a Making Home Affordable Refinance or Modification, you can try one of the following:

   * Forbearance: Under a forbearance agreement with your mortgage company, you pay a portion of your regular payment or no payment at all for a specific period of time. At the end of the forbearance period, you begin making regular payments as well as an additional amount to pay off the past-due amount.

   * Repayment Plan: If you have missed payments, your mortgage company may be able to help you catch up by creating a schedule for repaying the past-due amounts.

   * HomeSaver Advance™: If your mortgage is owned by Fannie Mae and your missed payments are due to a temporary financial hardship, you may be eligible for an unsecured personal loan to help you get current with your payments.

However, if you cannot afford your home over the long term, you may need to sell the home and move to housing that you can afford. While this means giving up your home, you may still be able to avoid foreclosure. Discuss these alternatives to foreclosure with your mortgage company:

   * Pre-foreclosure Sale: If you cannot sell your home for the amount necessary to pay off the mortgage loan, ask about a pre-foreclosure or “short” sale. In certain situations, the servicer may be willing to accept a payoff amount less than what you owe on the mortgage balance.

   * Deed-in-lieu of Foreclosure: If you cannot sell your home in a reasonable amount of time, your mortgage company may allow you to voluntarily transfer the deed to the property to the mortgage company.