| Three families have joined a class action lawsuit | | | | Three families have joined a class action lawsuit |
| against Wells Fargo and Bank of America saying the | | | | against Wells Fargo and Bank of America saying the |
| lenders failed to provide promised payment | | | | lenders failed to provide promised payment |
| modifications. | | | | modifications. |
| Even though they submitted all required documentation | | | | Even though they submitted all required documentation |
| they haven't received long-term arrangements. | | | | they haven't received long-term arrangements. |
| "When a large financial institution promises to modify | | | | "When a large financial institution promises to modify |
| an eligible loan to prevent foreclosure, homeowners | | | | an eligible loan to prevent foreclosure, homeowners |
| who live up to their end of the bargain expects that | | | | who live up to their end of the bargain expects that |
| promise to be kept." Sounds pretty simple doesn't it? | | | | promise to be kept." Sounds pretty simple doesn't it? |
| It seems that even though some homeowners that | | | | It seems that even though some homeowners that |
| have met the requirements for the program are in the | | | | have met the requirements for the program are in the |
| end being rejected. Home owners that have been | | | | end being rejected. Home owners that have been |
| granted a modification that reduces their payments | | | | granted a modification that reduces their payments |
| have made payments for the 3 month trial period, as it | | | | have made payments for the 3 month trial period, as it |
| requires in the Home Affordable Modification Program | | | | requires in the Home Affordable Modification Program |
| (HAMP), but they claim that a foreclosure has | | | | (HAMP), but they claim that a foreclosure has |
| proceeded or they have been turned down for | | | | proceeded or they have been turned down for |
| long-term plans. | | | | long-term plans. |
| Two cases filed in Massachusetts say homeowners | | | | Two cases filed in Massachusetts say homeowners |
| are "living in limbo" and spending scarce resources on | | | | are "living in limbo" and spending scarce resources on |
| payments that might ultimately not save their homes. | | | | payments that might ultimately not save their homes. |
| Neither Bank of America nor Wells Fargo has | | | | Neither Bank of America nor Wells Fargo has |
| commented as they say they have not been served | | | | commented as they say they have not been served |
| the lawsuit yet. Ohio lawsuits with different | | | | the lawsuit yet. Ohio lawsuits with different |
| complaints related to the HAMP say that homeowners | | | | complaints related to the HAMP say that homeowners |
| were promised modifications at a federally sponsored | | | | were promised modifications at a federally sponsored |
| event last year and as of yet they had not received | | | | event last year and as of yet they had not received |
| any documents to use to apply for the program. | | | | any documents to use to apply for the program. |
| Another complaint was that the borrowers continued | | | | Another complaint was that the borrowers continued |
| to receive foreclosure notices. The guidelines state: | | | | to receive foreclosure notices. The guidelines state: |
| "Any foreclosure action will be temporarily suspended | | | | "Any foreclosure action will be temporarily suspended |
| during the trialperiod, or while borrowers are | | | | during the trialperiod, or while borrowers are |
| considered for alternative foreclosureprevention | | | | considered for alternative foreclosureprevention |
| options. In the event that the Home Affordable | | | | options. In the event that the Home Affordable |
| Modificationor alternative foreclosure prevention | | | | Modificationor alternative foreclosure prevention |
| options fail, the foreclosure actionmay be resumed." | | | | options fail, the foreclosure actionmay be resumed." |
| As usual federal guidelines are somewhat | | | | As usual federal guidelines are somewhat |
| cumbersome. Qualifications are fairly clear and are as | | | | cumbersome. Qualifications are fairly clear and are as |
| follows: (from | | | | follows: (from |
| Qualification Terms: | | | | Qualification Terms: |
| • The home must be an owner occupied, single | | | | • The home must be an owner occupied, single |
| family 1-4 unit property | | | | family 1-4 unit property |
| (including condominium, cooperative, and manufactured | | | | (including condominium, cooperative, and manufactured |
| homeaffixed to a foundation and treated as real | | | | homeaffixed to a foundation and treated as real |
| property under state law). | | | | property under state law). |
| • The home must be a primary residence (verified | | | | • The home must be a primary residence (verified |
| with tax return,credit report, and other documentation | | | | with tax return,credit report, and other documentation |
| such as a utility bill). | | | | such as a utility bill). |
| • The home may not be investor-owned. | | | | • The home may not be investor-owned. |
| • The home may not be vacant or condemned. | | | | • The home may not be vacant or condemned. |
| • Borrowers in bankruptcy are not automatically | | | | • Borrowers in bankruptcy are not automatically |
| eliminated fromconsideration for a modification. | | | | eliminated fromconsideration for a modification. |
| • Borrowers in active litigation regarding the | | | | • Borrowers in active litigation regarding the |
| mortgage loan can qualifyfor a modification without | | | | mortgage loan can qualifyfor a modification without |
| waiving their legal rights. | | | | waiving their legal rights. |
| • First lien loans must have an unpaid principal | | | | • First lien loans must have an unpaid principal |
| balance (prior tocapitalization of arrearages) equal to | | | | balance (prior tocapitalization of arrearages) equal to |
| or less than:o 1 Unit: $729,750o 2 Units: $934,200o 3 | | | | or less than:o 1 Unit: $729,750o 2 Units: $934,200o 3 |
| Units: $1,129,250o 4 Units: $1,403,400 | | | | Units: $1,129,250o 4 Units: $1,403,400 |
| Income and assets are verified and all applicants are | | | | Income and assets are verified and all applicants are |
| screened for hardship. If a borrower is determined to | | | | screened for hardship. If a borrower is determined to |
| be a potential for "Imminent Default" the servicer must | | | | be a potential for "Imminent Default" the servicer must |
| apply the NPV Test. | | | | apply the NPV Test. |
| "This NPV Test will compare the net present value | | | | "This NPV Test will compare the net present value |
| (NPV) ofcash flows expected from a modification to | | | | (NPV) ofcash flows expected from a modification to |
| the net present value of cashflows expected in the | | | | the net present value of cashflows expected in the |
| absence of modification. If the NPV of | | | | absence of modification. If the NPV of |
| themodification scenario is greater, the NPV result is | | | | themodification scenario is greater, the NPV result is |
| deemed positive." | | | | deemed positive." |
| The guidelines go on to say: " The NPV Test applies | | | | The guidelines go on to say: " The NPV Test applies |
| to the Standard Waterfall only and does not | | | | to the Standard Waterfall only and does not |
| requireconsideration of principal forgiveness. | | | | requireconsideration of principal forgiveness. |
| However, the servicer maychoose to forgive principal | | | | However, the servicer maychoose to forgive principal |
| if the servicer determines that principalforgiveness | | | | if the servicer determines that principalforgiveness |
| improves the likelihood of loan performance and the | | | | improves the likelihood of loan performance and the |
| value ofmodification. Required parameters for the | | | | value ofmodification. Required parameters for the |
| NPV Test will be publishedseparately." | | | | NPV Test will be publishedseparately." |
| A reduction in principal is up to the lender if they want | | | | A reduction in principal is up to the lender if they want |
| to really help achieve the Debt-to-Income ratio required | | | | to really help achieve the Debt-to-Income ratio required |
| for a successful modification. | | | | for a successful modification. |
| Guidelines for Interest Rate Cap, Principal Forbearance, | | | | Guidelines for Interest Rate Cap, Principal Forbearance, |
| incentives for lenders and borrowers and all other | | | | incentives for lenders and borrowers and all other |
| details about late fees and costs associated with the | | | | details about late fees and costs associated with the |
| process are covered and can be found at: | | | | process are covered and can be found at: |
| Needless to say, this is a complicated process and | | | | Needless to say, this is a complicated process and |
| should be managed by a professional unless you have | | | | should be managed by a professional unless you have |
| the endurance and patience to apply yourself. Beware | | | | the endurance and patience to apply yourself. Beware |
| of anyone who asks you to pay a fee in exchange | | | | of anyone who asks you to pay a fee in exchange |
| for a counseling service or modification of a delinquent | | | | for a counseling service or modification of a delinquent |
| loan. | | | | loan. |
| A short sale is a viable alternative and will affect your | | | | A short sale is a viable alternative and will affect your |
| credit score less than a foreclosure. Of course this | | | | credit score less than a foreclosure. Of course this |
| process requires a lot of the same paperwork and | | | | process requires a lot of the same paperwork and |
| can be daunting at best. The professionals at are | | | | can be daunting at best. The professionals at are |
| successful and will work with a homeowner to make | | | | successful and will work with a homeowner to make |
| the best decisions for each individual. | | | | the best decisions for each individual. |
| Do you Qualify for a Loan Modification? | | | | |