The governments Making Home Affordable Program (HAMP) released in March 2009 was designed to help homeowners modify mortgages and stay in their homes. While qualifications for HAMP seem pretty straight forward, the governments program appears to be failing.
While many borrowers have applied for HAMP, a very small portion of them seem to be getting the
mortgage relief they had hoped for ending up in foreclosure or hiring a bankruptcy attorney. If you can’t get a straight answer from your mortgage servicer or denied a loan modification without good reason you might want to consider alternate measures. Borrowers continue to complain about going round and round for months with no results, or stuck in a trial period with no permanent modification. The government encourages homeowners to try loan workouts directly with their lender and not hire an attorney. It’s almost like telling someone to do you’re their own brain surgery rather than go to a qualified physician.
So What Should You Do?rnFirst things first! In order to get a HAMP loan modification you’re required to pass the initial 5 question eligibility check, and most homeowners do. This Waterfall Process is what most homeowners are familiar with and see readily available. BUT, it’s really not as simple as qualifying for these 5 questions:
1. Is your home your primary residence?rn2. Is the amount you owe on your first mortgage equal to or less than $729,750?rn3. Are you having trouble paying your mortgage?rn4. Did you get your current mortgage before January 1, 2009?rn5. Is your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner's association dues, if applicable) more than 31% of your current gross income?
While it might seem pretty simple to get a
loan modification based on these 5 questions, there’s a lot more to getting approved than meeting these simple criteria. Not only do you have to meet all Federal program guidelines, lenders require you also pass specific guidelines and tests, most importantly the NPV test. The NPV test is an extremely complex mathematical formula provided by the Treasury Department for the banks use to determine if it’s more profitable to modify the loan or foreclose on the property. In some cases they may even consider approving a HAFA short sale, but these have proven difficult to negotiate.rnWhat Borrowers Really Need To Know
Each lender runs the NPV as the final determining factor for a loan modification approval or declination. This is where most homeowners are denied for modification. The Lender can use the Federal NPV model or change it to meet their specific requirements. Another words, make up their own rules as they go along. It’s almost like a football referee moving to line you need to cross in order to get a first down. If you cannot pass the NPV you do not get a modification, it’s that simple! Many end up hiring a bankruptcy attorney to stop the foreclosure process or just walk away.
Through an independent third party bankruptcy attorneys now have access to the same decision models the Lender's use to determine if you are going to be approved for your loan modification or not. We are happy to provide this information to the public in an effort to help consumers determine the best route to take. If you pass the NPV test your chances for a loan modification would appear pretty good. It’s still up to your lender to modify but at least this way you can make an informed decision. Consulting an attorney, preferably a
bankruptcy attorney makes a lot of sense if you are declined. A bankruptcy attorney can see if you qualify for a Chapter 13 or Chapter 7 bankruptcy. While filing bankruptcy is presumed to be a last ditch effort to stop foreclosure, many use bankruptcy as a means to eliminate underwater 2nd mortgages. Additionally, a bankruptcy attorney can give you a clear cut path as to what type of bankruptcy to file, Chapter 7 or Chapter 13.
There has been a long list of borrowers either foreclosed on or waiting to be foreclosed on by Bank of America. The country’s largest bank has been under fire in recent months for its unfair business practices and lack of good faith with relation to modifying toxic mortgages and administration of the government’s HAMP and HAFA programs. Additionally, Bank of America scooped up billions in Countrywide mortgages for pennies on the dollar and now it may be time to share the wealth.
The nation’s largest bank never froze foreclosures in 27 states including California and Nevada, and many of the banks customers in these states have been in line for a loan modification for well over a year now. Some making trial payments for a year while loan modifications are under endless review, only to find them denied and foreclosed on.
"Some of the nation's top trial lawyers have banned together and are secretly beating the banks. These are the lawyers who previously represented these very banks; the lawyers who -- for years -- have gone to Court and "ended the madness" for many clients; the lawyers who know their way around the courthouses better than anyone. Already, these lawyers have filed a mass joiner case in 2009 that remains pending against Bank of America (and Countrywide) and includes thousands of Californians. This case is now going national. These lawyers have invoked laws and procedures the banks were previously unaware of, and Bank of America is getting beat at their own game because of it. Two weeks ago, the Bank was forced to admit that it had been defrauding the government in foreclosing on mortgages nationwide. Furthermore, on October 4, 2010, the Honorable Manuel Real of the United States District Court called the Bank's primary argument "absurd" and kicked the Bank out of Federal Court. The case is now proceeding in the trial court, and the mass joiner of plaintiffs from around the Country is expanding. It may be that the Bank is unable to recover under any of their promissory notes, or that the Bank has made other errors that will cause other penalties to be levied against them. If you are a former or current Bank of America customer and feel that you might, or have information relating to similar issues with Bank of America (and Countrywide), or if you wish to discuss this action or have any questions concerning this Notice or your rights or interests with respect to these matters, please contact us today.
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