Mortgage servicers cause problems. That’s a fact.
If you’re financially stressed, facing foreclosure, or just trying to get a question answered from your mortgage lender, chances are – it’s not going well.
Mortgage lenders can be very hard to work with – particularly when your mortgage is in default.
Once you’ve started missing mortgage payments, the best thing you can do for yourself is to hire an attorney to help you resolve the issue.
But if that’s not an option for you, use this post to help you know what to expect and what you can do to help yourself make it through the loss mitigation process.
Whether you’re applying for a loan modification, short sale, repayment plan, COVID transition plan or deed in lieu of foreclosure – you will likely experience one of the problems listed below.
1. Mortgage servicers give you the runaround
If you’re working on a loss mitigation application, it can often feel like the bank is not giving you straight answers about what is going on.
Most commonly, it is very hard to get an update on what is actually being done on your file.
Lenders are trained to tell you that the file is “in review” and that they will have a decision “within 30-days” but as time passes, it can start to feel like nothing is happening or you’re not in the loop.
SOLUTION: Ask them specific questions that they can’t ignore.
To prevent yourself from getting the runaround, don’t ask general questions and don’t accept general answers.
Below are some common specific questions that will help you feel like you know what’s happening:
- What is the last date that someone worked on my file?
- What does the most recent note made to my file say?
- Who is my file assigned to and what is their role?
- Does my file show that there are any missing documents?
- Is my file complete?
- When is the next date someone will touch my file?
By asking specific questions that require more information than just a yes / no answer, you will force the representative on the line to give you better answers.
2. Mortgage servicers do not return voicemails
If you’ve been calling your lender regularly, you are probably being told that you just need to leave your point of contact a voicemail and they will return your call.
Chances are, in reality, no one is calling you back. Servicers use voicemail as a way to push you off the phone quickly without actually helping you.
SOLUTION: Refuse to be transferred to a voicemail.
When a customer service representative tells you that they are going to transfer you to your single point of contact or to their voicemail, stop them before they do so.
Tell them that you appreciate the offer but that your single point of contact is rarely available, that you’ve left them several voicemails, and that you aren’t getting calls back.
Tell them that you’d prefer to be helped by them now and then ask them to read you the notes on the file. If they tell you that they can’t read you the notes because they don’t have access to them, ask them to complete a “warm transfer” to someone who can.
Make them stay on the call with you until you’re connected with a live person who can help you.
3. Mortgage servicers tell you conflicting information
It is very common for homeowners to hear something from a customer service representative and then call back on a different day and hear something totally different.
Once this happens, it can be very hard to trust the update that you’re getting.
SOLUTION: Only rely on the notes that are written down and attached to the file.
Instead of having the customer service representative read the notes attached to your file and then translate the information to you, force them to just read you what’s attached word for word.
The notes attached to your file are written by the underwriters who work on the files. The underwriters do the work but they don’t talk to the homeowners. The information they write on your account reflects what is actually going on. The customer service representatives who talk to you try to translate the information on the file but sometimes, they just get it wrong.
If they start to do this, politely tell them that you’d prefer it if they just read you what the note says.
4. Mortgage servicers sell or service-release loans in the middle of loss mitigation reviews
A service release occurs when your mortgage is transferred or sold to a new servicer. This is common in the mortgage servicing industry.
A service release can occur right in the middle of your loss mitigation review and can cause some confusion about how the process is going to move forward.
SOLUTION: Follow these four rules.
1. Be proactive
Don’t wait for the new lender to reach out to you! As soon as you find out that your loan is going to be service released, start tracking your loan with your new bank.
Start calling the new lender every 48 hours and ask the the same question each time:
“Has my loan boarded yet?”
You cannot get going on your loan modification again until your loan has populated in the new lender’s system so it’s your job to call regularly so you can catch the exact moment when your loan has boarded so you know the exact moment when you should submit your documents again.
If you wait for the new lender to contact you, you will be waiting several more weeks.
2. Don’t be fooled by your old lender’s lies!
Assume that no information from the old lender will transfer and be prepared with a brand new loss mitigation package.
If you were in the middle of a loss mitigation review with your old lender, don’t believe them when they tell you that everything will fully transfer over. You cannot expect to just pick up where you left off.
You should treat the service release as if you’ve been pushed back to the beginning of the process. Gather your financial documents again and UPDATE EVERYTHING so all your pay stubs and bank statements are recent, within the last 30-60 days.
3. Get the updated application from the new lender as soon as you know about your service release.
Each lender has a different application form that accompanies the loss mitigation request. Even if your loan hasn’t boarded in the new lender’s system yet, you can still request that your new lender send you a blank copy of THEIR loss mitigation application so you can work on it and get it ready as soon as possible
4. Don’t be afraid to submit your loss mitigation package even if you don’t have your loan number yet!
You may not have your loan number right when you’re ready to submit your package. If your loss mitigation package is updated and ready to be submitted, don’t let your lack of loan number stop your submission.
Instead of including the loan number on the application, write your social security number on the loan number line instead.
When you finally get your loan number, you can update your documents and re-submit them with your
5. You get a Notice of Default in the middle of your loss mitigation review
Your lender may tell you that your foreclosure will be stopped or is stopped as a result of your loss mitigation review and then they may tape a Notice of Default to your door.
This can be very scary. This happens for a variety of reasons.
It is possible that your loss mitigation file was complete and the foreclosure was placed on hold but then some other documents became needed and the hold was removed.
It is possible that you got denied from the loss mitigation option you were applying for and your notification letter hasn’t come yet.
It is possible that your loss mitigation package was submitted too close to your foreclosure auction date and the lender does not have to place a foreclosure hold on the account.
Or, it is possible that the lender simply did not place a foreclosure hold on the account even though you have a complete package in review and qualify for the 30-day loss mitigation hold.
SOLUTION: Consult with an attorney and see if the default notice makes you eligible for foreclosure mediation
In Washington state, eligible homeowners who receive a Notice of Default can attend foreclosure mediation. Mediation stops the foreclosure and brings the lender to the negotiation table to try to work out a solution.
If you get a Notice of Default in the middle of your loss mitigation review, do everything you can to protect yourself and figure out if you qualify for mediation.
If you are a Washington state homeowner who is experiencing any of the issues above, feel free to give me a call at (425) 654-1674.
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