How To Get a HAMP Modification - Q&A #1

Ok Everyone, this is LONG - but I think there are some good points in here for anyone looking to get a HAMP modification:

After working, for 5 years, for a national loan servicer specializing in loss mitigation of delinquent loans, I had my fill of loan modifications and short sales. Nightly dreams of HAMP, HARP, and HAFA fairies dancing all around saying “nope, you are still missing the dodd frank!! Ha ha! Now, don’t forget the RMA!!!” left me feeling …. Drained!! Now, in my spare time, I have taken on helping a few friends get a mod on their home. The first thing they ask is “How do we get this done?”. It is a very viable question as most people these days are left spending countless hours calling their servicer, resending documents, explaining their situation multiple times, and often still losing their homes.

So, for my 1^st Q&A this month I will share my “tips” for getting your HAMP mod done!

1.)    Make sure that you submit a COMPLETE package the first time. Be thorough, don't waste your time or theirs! It is extremely important to give a good impression, even to a servicer. Many times the servicer contacts have a portfolio assigned to them, so, as you can imagine, they pick and chose the clients they want to give their extra attention to. Best practice is to start with a cover page which outlines the documents that are attached. Put the documents behind the cover page IN ORDER!

a.       RMA – Request for Modification Assistance

b.      4506-T

c.       Dodd Frank Certification (this is usually included in the RMA form, but if it is not then make sure you attach it separately)

d.      Hardship Letter - ***NOTE: Do NOT just copy a hardship letter from the internet – it’s obnoxious! Write a real letter that clearly outlines why you fell behind on your payments, why you need a modification, and most importantly, what has changed that will allow you to begin making payments again. IE: I was out of work for a period of time but have now returned to work and am gainfully employed … etc

e.      2 most recent paystubs

 i.      Side note: If you are self employed you must provide a 3 month Profit and Loss Statement with bank statements to corroborate the income, for SSI income you must provide the most recent award letter and bank statements showing proof of the deposit

f.        2 most recent bank statement – DON’T WORRY – most servicers do NOT even look at your bank statements – while it would seem like common sense that they would, frankly, it doesn’t matter to them what you spend your money on.

g.       Most recent tax returns – SIGNED – if you have e-filed then make sure to include the e-file confirmation

2.)    This one is a bit trickier BUT I find it to be of utmost importance. USE YOUR RESOURCES. All HAMP directives, which are the rules that servicers must abide by, as outlined by MHA, are public record online! Read them, become familiar with the timelines, guidelines, and requirements. Outline the fact that you are aware of these by quoting them on a cover letter which clearly outlines what you expect. Here is an example (mind you, this is pretty in depth, but, it is a good jumping off point): 

A few other things to know …

1.)    If the income you are making is NOT enough to support the payments even under modified terms – you do have other options! If you have a spouse, partner, child, parent, etc that lives in your home and helps you with the finances each month you can use that income as a contribution. Make sure that this is income you KNOW you can rely on. If you chose to use it, you will need:

a.       A contribution letter from the contributor (simply state “I _______ contribute $XXXX.XX to the household income of 123 Main Street Each Month”)

b.      Proof of residency and proof of income for the contributor (paystub, SSI award letter, etc showing the property address)

c.       The contributor will need to sign an authorization to pull credit – this is located on the RMA form (income/expense page). HAMP modifications are NOT based on credit, but this is a requirement per the HAMP Directives. 

2.)    Ultimately you can dispute the HAMP findings – if you feel that you were wrongly removed from HAMP you can request a re-review, or even request a copy of the NPV inputs they used to make the determination. This is definitely a little bit of a higher level process, so, if it gets to this point you will want to enlist the help of someone who has the expertise needed.

3.)    This is a hard one to understand, but very important, even though you have taken all of these steps to get a mod, you still might not qualify. For example, if you own a home that is worth $600,000 but you are only making $10 per hour, 40 hours per week, there is no feasible way for you to be able to afford such a caliber of home. It is a sad realization but sometimes you just need to sell. There are many options to help you through this process as well. 

NOW, I know that this looks difficult, and to be honest, it kind of is. But remember, to the bank, this is business; it is not personal. Again, this is business; it is NOT personal. Take the emotion out of it and stay sharp and focused. You WILL get this done. And, of course, if you need help, just ASK!

OH! PS – If you are going to hire a 3^rd party company to help you – be VERY VERY careful. Many of them are scams that do nothing at all, or, almost worse, many take your money and your documents and then let them sit on their desk all the while promising you the world. Moreover, so many of the authorized third parties out there have absolutely no idea what they are talking about and end up hurting, not helping. So, do your due diligence. Get a referral, read reviews, ask questions, test their knowledge; don’t sign anything or pay any money until you are confident that you chose the right person to act on your behalf!