Okay folks, I’ve decided (with Her Highness’s input) that I will not provide any more gritty personal details of the fiasco we’ve been going through with our loan modification process through Bank of America.
Let me just say that by and large, the people I’ve spoken with are good people who think they’re doing a good job. The problem is the institution and the process and the fact that the institutions have determined the process in connection with politically-motivated regulations rather than service motivations.
I have decided to share, for your learning pleasure, some top myths about loan modifications. I admit that a couple of these have been learned by experience, particularly the ones about communication with the lender. However, others are simply those that I’ve learned through anecdotes and commiserating with acquaintances.
1. Hiring a third party to negotiate the loan modification improves the process.
This is dead false. In almost every case, you are better served working with the lender yourself. Honestly, it is difficult to think of a situation where it would be better to have a third party ‘help’ you get a loan modification negotiated. They will tell you that they know the right kinds of things to say, they know the system well, and that they will save you a lot of effort.
They might even guarantee to reduce your payment 30% or so, or your money back.
It’s all a lie, even if they are ostensibly telling the truth.
You don’t need to say the ‘right things.’ You need to simply provide documentation that is accurate and timely and compose an honest, detailed letter of need. You don’t need special knowledge of the system; again, all you need to do is provide timely and accurate documentation. They won’t save you effort, particularly if they don’t keep you regularly apprised of what’s going on. You will spend as much time trying to reach them and get updates as you would have spent working with the bank.
And guarantees are worth so much spit. What they hope you don’t know is that you only get your money back if they ultimately fail. But it is impossible to ultimately fail because you can appeal loan modification decisions ad infinitum. So if you want the process to end and you want your money back because you wish to get out of limbo, you aren’t getting your money back. It’s gone, folks.
2. Over the phone is just as good as in writing.
This is wrong, wrong, wrong. It doesn’t matter what they say over the phone, if you don’t get it in writing, it doesn’t mean squat. Things said by reps over the phone are not promises and the lender feels no inclination to honor it, particularly because you have no proof.
Always get things in writing and do your best to have all communication happen through snail mail. If you do talk over the phone with your lender, do what you can to record the conversation. Also, make a note of the person’s name, employee ID # (you have a right to all of this), the date, time and everything said. Feel free to let the rep know that you are recording the conversation. If they say you can’t, they’re wrong. Tell them you are protecting your interests.
You can, by the way. And it holds up in court if you inform them at the start that you are recording.
3. What representatives say over the phone is always accurate.
Nope, sorry. Reps are constrained by training, slow and often outdated computer systems, incomplete information recorded by other reps, and their emotional state. They are also constrained by bad compartmentalization in large lenders like Bank of America and a terrible system of communication and correlation that victimizes the heck out of customers.
4. Notices of Intent to Accelerate regenerate each month if you make a monthly payment.
This is false. It might look like your Notice of Intent regenerated because you got a new one and there is a new date of expiration on it. That is false. Those come from the lender and seem to be generated every two weeks or so. Make a payment, but if you have defaulted on your loan and are behind from a few months ago, your only hope is to bring your account current.
Don’t depend on the loan modification to fix things.
5. It is good and helpful to miss some mortgage payments; this increases your leverage.
Very related to #4 above. Many third parties will advise you that if you are struggling to make your payment, it is okay to miss a few months. This is wrong. Very wrong.
First, your credit score will suffer.
Second, if you miss more than three payments, foreclosure proceedings will likely commence.
It does no good to have missed some payments. If anyone insists that it does help, this is a lie, deliberate or no.
Don’t miss payments. You are legally and contractually bound to make your payments. A default is a default and the articles of your contract allow your lender to do what it needs to in order to recoup its losses.
6. The foreclosure process is paused or held off as long as you are in review for a loan modification.
Third parties will tell you this to bring you comfort. Reps on the phone will say the same. This assumes that the bank is in control of your loan.
Most of the time, they are not.
Your loan modification process is not a guarantee that a loan modification will actually come to pass. The lender and investor who owns your loan can do what they want, when they want, to recoup their losses. DON’T COUNT ON YOUR LOAN MODIFICATION REVIEW PROCESS TO KEEP YOU SAFE FROM FORECLOSURE.
7. Your lender is in control of your loan.
This is hocum, unless the lender somehow still owns the loan. Your lender is the loan’s manager, because usually there is an investor who actually ponies up the dough for the mortgage. The investor calls the ultimate shots.
The loan modification process: Apply with your financials and letter of need, first review, underwriter review, decision, INVESTOR review, final decision.
Your loan’s investor is in charge.
So there you have them: seven dangerous myths about loan modifications. Spread the word.