Can you see the writing on the wall? That the reductions in income or increase in expenses are going to have you struggling to make your mortgage payments soon - AND put food on your table AND keep your heat and lights on?
Have you tried to let your mortgage company know, and feel like a rat in a maze trying to get the financial hardship assistance you hear others are receiving?
Well let’s see if you can do this on your own. Cruise around Fannie Mae, Freddie Mac, Making Home Affordable websites, and read up on the various alternatives out there. Maybe you don’t have a qualified, competent HUD certified Housing Counseling Agency or other Non-Profit Counseling Agency that has housing counselors available to assist you. Many homeowners have accomplished this by themselves. There are many, many different programs available now, but these steps should help you on your way for many of them.
Step 1: Take several deep breaths, pray, do yoga – whatever healthy relaxation techniques you use to help yourself wind down, as this is going to be a tedious and challenging process. You will need to exercise these relaxation techniques DAILY for several months.
Step 2: Go to your mortgage company’s website, and look for their financial hardship assistance webpage. Some are better than others on coaching you through their individualized process. Some provide very general information only, pointing you out to other resources. Here are a few of the major servicer/mortgage companies:
- Bank of America http://homeloanhelp.bankofamerica.com/en/index.html?cm_mmc=CRE-Mortgage-_-Google-PS-_-making%20home%20affordable-_-MHA
- Chase https://www.chase.com/chf/mortgage/hrm_documents
- Flagstar Bank https://www.flagstar.com/personal/home-loans/mortgagepaymentrelief.html
- SunTrust Mortgage http://www.suntrustmortgage.com/lo/lohbuy.asp?3820
- Wells Fargo Home Mortgage https://www.wellsfargo.com/homeassist/
Additional Resource to find your servicer/mortgage company can be found here - Making Home Affordable Servicer list http://makinghomeaffordable.gov/contact_servicer.html
Step 3: Print out your mortgage company’s instructions and financial hardship application forms from their website if they provide them, which should consist of the Request for Modification and Affidavit, 4506T or 4506T-EZ forms, and a Third Party Authorization form if you are working with a HUD certified housing counseling agency or other non-profit counseling agency. Here are links to the Request for Modification (RMA) and 4506 forms (if your servicer/mortgage company does not have their own on their website) where you can fill the forms out yourself online, print/save them to send to your mortgage company with your supporting documentation outlined in Step 4:
- Request for Modification and Affidavit form http://makinghomeaffordable.gov/docs/RMA%20Interactive%20-%20Updated%2011.10.09.pdf
- 4506T-EZ Form http://www.irs.gov/pub/irs-pdf/f4506tez.pdf
- 4506T Form http://www.irs.gov/pub/irs-pdf/f4506t.pdf
Complete these forms fully, and all borrowers on the loan must give their information and sign/date the form, unless there has been a qualified exception such as a death or divorce that is finalized with one party removed from title.
Step 4: Gather together your income and asset documentation. If you are unemployed, you will need your State unemployment insurance benefits award letter. If you receive social security or other retirement/pension benefits, you will need the annual award letter for SSI/SSA, the original one for the other sources. If you are employed by someone else you will need paycheck stubs covering two months and the last federal income tax return you filed plus your last two monthly bank statements received for all accounts (all pages, no online printouts). If you are self-employed you will need your business year-to-date profit and loss statement breaking down its income and expenses for the year, your last two years federal income tax returns filed (personal and corporate/partnership if your business is operating as those entities), your last two monthly bank statements received for all personal checking/savings accounts (all pages, no online printouts) and your last 6 months business bank statements (all pages, no online printouts). In addition to your income and asset documentation, you will need a current utility bill, ideally your electric bill, to prove you currently occupy your home.
Step 5: Sit down and analyze your household budget in depth. I know, I know… this job is AWFUL for some people, but it is so very important – to you and your family personally so you know where you are at and can nip any overspending and bad habits in the bud, but to your servicer/mortgage company, too… part of the requirements they must follow is to make sure they are not setting you up to fail, so they will decline your request for financial hardship assistance if you have a deficit household budget. A “successful household budget” has a little bit of room to cover the unexpected, which we all know we can expect! DO IT! Figure out exactly what income is coming in to your household, and what you are spending your money on – to the last dollar!!!! DO IT!!!! Here’s a simple one online. And you can find many others: http://www.betterbudgeting.com/budgetformsfree-basicbudgeting.htm . Pull your credit from www.annualcreditreport.com – probably just one of the three credit agencies is sufficient - and look at it. Make sure every account that has a balance you have been paying on is included in your budget…if it is a collection account or charge off, the servicer/mortgage company won’t count those monthly payments. If this process is too overwhelming or confusing, you need to work with a non-profit housing counselor. But, they will still require you give it your best shot first!
Step 6: Write a cover letter to give to your servicer/mortgage company explaining what you are asking for (i.e. Home Affordable Modification Program, temporary forbearance of your mortgage payments). Make sure this letter has your contact information and your loan number on it, and includes a brief summary of the events that led to your financial hardship. Give them the highlights, no elaborations or lengthy summations – the teams working on these files have THOUSANDS of them! Make your letter too long, or incomplete, and your file just may be headed to the bottom of the stack. Tell them about your medical challenge, your reduced hours at work, your lost job, your martial separation/divorce – just keep it short and sweet. It’s not that they are unfeeling, just BUSY.
Step 7: Submit your cover letter, the Request for Modification and Affidavit, the 4506T/4506T-EZ form, fully completed budget, income documents, bank statements and utility bill – in this order – to your mortgage company’s home retention division. Try to scan and email it, as this is the easiest way to resubmit if necessary and less likely to end up in the black hole every major servicer seems to have and it ends up in one file, so you shouldn’t need to write your loan number on every page. If you can’t email it, fax it to the home retention division…call your mortgage company and ask for that department, then ask them for their fax number. If all else fails, send the package to them by mail with delivery confirmation – USPS priority mail, UPS, Fed Ex. You’ll need to write your loan number on the top of every page you are submitting if you fax or mail it in. Call your servicer/mortgage company to confirm they received your submission 3 days after you send it. You may have to do this several times as it takes some of them up to 2 weeks to get the files in their system. If after two weeks they say they didn’t receive it, send it again. If you are working with a non-profit housing counseling agency, they will help you do this. They will also have additional contacts and resources to help move your file through this system. If you get stuck, get to a non-profit housing counselor.
Step 8: Keep a copy of everything you submitted to your servicer/mortgage company in one file. Every new paycheck stub, bank statement, profit & loss statement you receive should go in to that file, but hold on to them until you are asked by your servicer/mortgage company for these updates . Keep a log in that file and write down the date, phone number, name and employee number of every contact you make or receive from your servicer/mortgage company during this process. This will become a long record, because you are going to call weekly and check on the status of your request, noting the results of that call every time. Highlight the contacts you make that are most helpful for getting you answers. Even if your servicer/mortgage company tells you not to call so often, call weekly anyway… often times they make notes in their system that they need additional documentation from you, and you will only find out when you call in. Any correspondence you receive from your servicer/mortgage company on this home loan should go in to this file while you are working on obtaining financial hardship assistance. Even if you are working with a non-profit housing counselor, you should still take care of this step yourself and make sure your servicer/mortgage company receives that call from you every week.
Step 9: When your temporary forbearance agreement or modification agreement arrive, your servicer/mortgage company will not give you much time to review, sign and return it. If you have questions about its contents, you need to get to a non-profit housing counselor to help you interpret it. The servicer/mortgage companies can usually answer your questions, but I believe the input from a non-biased, neutral housing counselor is a better option if it is available to you. These services are usually free, so why not use them? The forbearance is meant to give you time to resolve a temporary setback, such as unemployment or a medical situation or to resolve excessive other credit. On a modification, your new modified payment should be roughly 1/3 of your total gross monthly income including property taxes and homeowners insurance. If your payments are substantially higher than 1/3 of your income before taxes and withholdings, chances are good your servicer/ mortgage company used an incorrect number. Know, though, that they are not looking at any 2nd mortgage payment in this amount, only the principal, interest, taxes, insurance and homeowners association dues, if any. 2nd mortgages and other installment loan payments, credit cards, student loans, child support etc. can’t exceed roughly 20% of your gross monthly income.
If you receive a Trial Home Affordable Modification Program, start calling your servicer/mortage company again weekly when you make your 3rd payment per that agreement and begin asking for status on the conversion of your trial mod to the permanent one. Keep making the trial modificaiton payments each month, even if it takes several more months before the permanent one arrives.
If you receive a temporary forbearance, gather together the updated income and asset documents you've been keeping in your file for this purpose, and send copies to your servicer mortgage company with your final payment and request to be considered for a modification or repayment agreement to help you resolve the back payments now that your temporary hardship is resolved. You may need to go to Step One above, and start over.
Many States are cracking down on some of the delays and mishandlings homeowners are experiencing when applying for financial hardship assistance. Look at this article for what to do if you encounter stumbling blocks. Remember – patience and diligence are your keys to success!
I wish you much success on your journey!
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