Why Hasn't My Loan Modification Become Permanent - I've made the trial modification payments and now I haven't heard anything from the bank?

Homeowner is a woman whose house is worth approximately $100,000.  She has a mortgage loan of approximately $180,000 and a new trial modification payment of $1000 per month.  She has made all three trial modification payments of $1000 each on time and in compliance with the lender's demands.  At this time, she has now made a total of 6 payments and the lender has still not offered a permanent loan modification.  After the third payment was made the lender "asked for more information".  She has not been able to get any more updates from the lender.

What should she do?

If she wants to stay in the house for over the next five years regardless of whether the loan modification is made permanent, keep making the trial modification payments until the lender says otherwise.

If she does not want to keep the house unless she get the permanent loan modification, I would recommend walking away from the home.  The homeowner should try a short sale, deed in lieu of foreclosure and ultimately bankruptcy to eliminate this debt.

Rationale:

Most residential primary household loan modification are done under the guidelines of the HAMP (Home Affordable Modification Program).   This "program" is not a law and is not something that a homeowner can enforce against a lender.  Instead, it is a law that provided "incentives" of up to $1000 to a mortgage servicer to  keep a borrower from defaulting on their mortgage.  The incentives HAVE EXPIRED.  Lenders are simply offering modifications under these guidelines to improve their profitability by keeping more borrowers from defaulting.  However, where a borrower really can't afford the home long term, it can be surmised that lenders are simply "stringing along" borrowers for several months...without end at trial loan modification payments amounts to get them to pay more towards the lender until they ultimately either give up, default or go back to making their regular mortgage payments.

Therefore, in this case if the borrower simply stopped paying after 6 months of trial modifications, she would be:

1. In Default
2. Not have a modified mortgage
3. Be in arrears immediately because she had been making a lower payment than what was required by the lender

So why can a lender get away with this?

1. Lenders DO NOT have to give modifications after the trial period is completed
2. Lenders DO NOT have to given modifications even if underwriting says they qualify
3. Lenders CAN tell borrowers that they will accept lower payments and accept them and Still then declare a default at anytime and foreclosure AT THEIR LEISURE AND WILL
4. Borrower CAN BE SCREWED OVER at anytime in these modifications
5. Lenders CAN CHERRY PICK only the best borrowers and use modification processes to hurt borrowers and get the most amount of money from them

So is there any justice?

YES - in foreclosure, if the borrow hires good legal counsel for usually more than $2500 in legal fees, fraud can be alleged and judicial action can be taken against the lenders including rescinding the loan.

Why don't we here more about loans being rescinded?

Usually borrowers are completely out of money and the will to fight any longer by the time the foreclosure begins and simply walk away.  Lenders know this and build their business models to exploit this.

Bottom line - BE AN ACTIVIST!  If you don't get your permanent modification in three months as promised, don't wait - take action.  Call any attorney immediately to figure out your options:

1. Foreclosure Defense
2. Bankruptcy
3. Non-Bankruptcy Surrender Options

For more assistance and to schedule a consultation click this link to email NLO Nelson Law Office today by clicking HERE! or calling 877-464-6656