Mr. Cooper Loan Modification – Problems & Solutions

Mr. Cooper Mortgage Company (formerly known as Nationstar Mortgage), is a residential mortgage servicer that specializes in working with loans that are in default.

Chances are, if you have a loan with Mr. Cooper, you’re having a difficult experience working with them.

My personal opinion about Mr. Cooper (based on working with them for over ten years) is that they service too many loans and don’t hire enough representatives to provide good service to their borrowers.

I was once told by a supervisor at Mr. Cooper that she was responsible for 250 files at one time. This is too many files for one person to manage.

There is a structural problem at Mr. Cooper and the results of their problems impact individual homeowners. So, if you’re struggling with them – you are not alone!

Read on to learn how to contact Mr. Cooper, how to deal with their loss mitigation department and how to apply for a loan modification.

Additional Resources:

Here’s how to prevent a foreclosure if you are behind on your mortgage payments

Here’s what you need to know about any foreclosure notice you may have received

How do I contact Mr. Cooper?

Here is how to contact Mr. Cooper if you are having trouble paying your mortgage:

• If you haven’t already done so, create your online portal so you have access to all the documents Mr. Cooper issues related to your loan
• Call Mr. Cooper Loan Servicing’s loss mitigation department at: 888-480-2432
• Call their customer service department at: 888-480-2432
• Fax their loss mitigation department at: 214-488-1993 or 972-459-1611
• Email documents to their loss mitigation department: modification.assistance@mrcooper.com (this email address is used for documents only – documents will be received and attached to your account but you will not receive email communication back from Mr. Cooper)

Mr. Cooper’s 5 loss mitigation options to avoid foreclosure 

Unless you decide to reinstate your loan (meaning – unless you can pay back all the payments you missed at one time), familiarize yourself with the 5 loss mitigation options offered by Mr. Cooper.

You have to apply and receive Mr. Cooper’s approval to move forward with one of these options.

• Loan Modification: A loan modification is a new loan with new terms that allows you to resume mortgage payments without having to pay everything you owe all at once. Usually, your missed mortgage payments get added to your total principal balance and become due at the maturity date of the loan. It is common for loan modifications to offer reductions in interest rates, extended maturity dates, and sometimes – they lower the monthly mortgage payments.

• Repayment Plan: A repayment plan is an agreement that allows you to resume your regular mortgage payment and pay an extra amount on top of your mortgage payment until you’ve paid back all your missed payments. Once you have paid everything back, you continue making your regular monthly mortgage payment.

• Forbearance: A forbearance gives you a temporary break in having to pay your mortgage. Once approved for a forbearance, you are allowed to stop payments for the approved months without the lender taking foreclosure action against you.

• Short Sale: A short sale allows you to sell an underwater property for less than what is owed on the mortgage. Your mortgage lender approves the sale and then typically waives the deficiency balance (the remaining amount owed) so you can sell your home and move on without owing the remaining balance.

• Deed in Lieu of Foreclosure: A deed in lieu of foreclosure is an agreement between yourself and your mortgage lender where you sign a document giving the house back to the bank in exchange for the bank agreeing not to foreclose on you.  

What documents are required in Mr. Cooper’s loan modification application?

To apply for a mortgage modification, you will be required to submit a “complete loss mitigation package.” This is basically the lender’s application form plus all of the required financial documents that they require.

The documents include:

• Mr. Cooper’s loss mitigation form
• 4506-C form
• 60-days worth of bank statements
• Hardship letter
• 30-days worth of pay stubs (if you have a W-2 job)
• All other income verification for the household 
• The two most recent years of tax returns
• Other relevant documents that relate to your particular situation.

Here’s what you need to know about each of the loan modification documents

Mr. Cooper’s options for transitioning off of a forbearance plan

If you went on a COVID-19 Forbearance Plan with Mr. Cooper, you may have additional options to transition back to normal payments:

• If you have a qualifying investor backing your mortgage (FHA, VA, USDA, Fannie Mae, Freddie Mac) and;

• You took a COVID-19 forbearance plan as a result of financial hardship caused by the pandemic and;

• You were current on your mortgage prior to March 1, 2020

You should be able to transition off of your forbearance plan using:

• A payment deferral – where Mr. Cooper puts the missed payments on to the end of your loan to help you resume regular monthly payments

• A partial claim – where Mr. Cooper creates a subordinate lien containing the lump sum of payments you missed which becomes due at the maturity date of your loan

• A streamlined loan modification (no documents)

• A repayment plan

How to deal with Mr. Cooper’s communication problems when trying to get your loan modification approved

Mr. Cooper has some of the worst communication issues in the industry.

If you have the ability to retain an attorney’s help in dealing with them, you should – if only so you don’t have to stress about trying to get in touch with them.

If you’re going to go at it alone, make sure you understand what you’re up against and do what you can to avoid their most common communication problems.

Problem: Mr. Cooper’s phone tree system hangs up on you if too many people are calling them (even if you’ve been waiting on hold for a long time). 

Solution: Try calling them before 7:30am. Don’t call on a Monday or a Thursday.

Problem: Mr. Cooper’s hold times can exceed an hour (and their hold music is really annoying!)

Solution: Try calling them before 7:30am. Don’t call on a Monday or a Thursday.

Problem: If Mr. Cooper’s  line for loss mitigation is too busy, their phone tree will reroute you to a customer service representative without telling you that you’re not in loss mitigation anymore.

The customer service representative will not make clear that they are not a loss mitigation representative. Then, because they’re uninformed, they often give out inaccurate information about your loss mitigation review.

Solution: Regardless of what number you called, ask every representative at Mr. Cooper to tell you what department they’re in. If they say customer service, do everything you can to get them to complete a live, in-person transfer to a loss mitigation representative.

Problem: Mr. Cooper’s supervisors will give you their direct contact information and will assure you that you can call them and that they will call you back – but they don’t call you back.

Solution: Don’t rely on any sort of assurance that you will get some sort of individual attention. Call Mr. Cooper’s main loss mitigation line every 48 hours and speak to a customer service representative to get the most accurate update on your file.

How to deal with Mr. Cooper’s document review problems when trying to get your loan modification application deemed complete

Not only does Mr. Cooper struggle with communication, they also are known for having issues during the document review phase of loan modification review.

When you submit your loan modification package, Mr. Cooper assigns document processors to make sure they have all the documents needed to complete the review. Once the document processors deem the file complete, they pass the file to the underwriters who issue the decision on the loan modification.

Mr. Cooper is known for the following problems that can occur shortly after you submit your document package.

Problem: Files get “stuck” in the document review process and never move to the decision makers. 

Mr. Cooper is known for requesting the same documents over and over again (even if you’ve sent them in). They are also bad at making clear what issues with the documents need to be fixed. It is not uncommon for you to get stuck in a never ending document cycle where they’re requesting duplicate documents allowing other financial documents to expire.

Solution: Call Mr. Cooper regularly and ask informed questions

1. “Has my file been deemed complete?”
2. “Are there any missing documents showing as needed?”
3. “When was the last time my file was reviewed?”
4. “Is the file with the underwriting department or is it with a document processor?”
5. “Who is assigned to my file?”
6. “What is the next step in the process?”
7. “Why is that document being requested again when I sent it in already? Why is it being rejected?
8. “Can you read me the actual notes on the file to tell me what I need to correct in order to get that document accepted?”

Problem: Mr. Cooper only notifies you of missing documents with a missing document letter.

It takes them so long to send out these missing documents letters that sometimes they close your file for failing to send in the missing items when, in reality, you may not have even known that documents were being requested, due to their time delay in mailing out the letter.

Solution: Take ownership over making sure your documents don’t expire and call in regularly to ask them if there are any missing documents instead of just waiting on the letter

For bank statements and pay stubs, your lender will always want the most recent 60-days of bank statements and the most recent 30-days of pay stubs.

You need to be tracking the expiration of these documents. Pay attention to when a new pay stub or bank statement is issued.

Send these updated documents as soon as they become available, without waiting for the bank to ask for them.

The document processors only review files every week or so (sometimes every two weeks) so if you’re not paying attention to the expiration deadlines and the documents expire, the file could stop moving.

What does it mean if Mr. Cooper offers to “open an escalation for you?

Mr. Cooper receives so many complaints about how they handle their loss mitigation files that they have designated their own escalation team to deal with issues.

If you express dissatisfaction with how your modification review is going and ask to escalate the matter to a supervisor, they will transfer you to the escalation line where you will be connected with a representative who can help you “escalate” the matter.

Sometimes, this process is helpful and sometimes – it doesn’t do much.

The escalation representatives at Mr. Cooper have varying ranges of information about loss mitigation options (like loan modifications). Sometimes, you will reach someone who can truly help you figure out the issue and sometimes, you’ll be given to someone who has the title of an escalation manager but hasn’t received much loss mitigation training.

Instead of hoping that the escalation team member will help solve your issue (because that is rare), the most you can hope for is that they will email (through their internal system) directly to either the underwriting department or a supervisor in the loss mitigation department.

So, if you find yourself needing to escalate your loan modification review, follow the steps below:

• Get to an escalation team member
• When they tell you they will “open an escalation” tell them that in addition to needing the open escalation, you need them to attach a message directed to the loss mitigation department
• When they open the message, tell them exactly what you want them to say, as succinctly or clearly as possible

E.g. “My bank statement keeps getting request even though I’ve sent it in three times” or “My file has been with the underwriting department for 45 days when the review time should only be 30-days”

Mr. Cooper Success Story

I began work with a client who was only 60-days away from a foreclosure auction date. She had undergone a brief period of financial hardship, missed 6 mortgage payments, and had been in the process of trying to apply for a loan modification with Mr. Cooper for almost 4 months.

She could not get her file deemed complete. Mr. Cooper continued to keep her loan modification document package in an “incomplete” status because they stated that she was missing one year’s worth of tax returns. For the year in question, my client hadn’t actually filed tax returns but she did not know to send in a letter of explanation in place of the requested tax return (and Mr. Cooper didn’t tell her to do that).

I was able to get the file deemed complete by getting us past the tax return request barrier. I also adjusted some of her debt to income ratios with a new application to set her up for a better shot at success.

She was approved for a loan modification 20 days before her foreclosure auction. She accepted the loan modification and her foreclosure auction was canceled.

Next Steps

It’s great that you are reading about Mr. Cooper’s loss mitigation options. If you are a Washington State homeowner, the next step would be to schedule a free, mortgage relief consultation with me.

A mortgage and foreclosure attorney will have the experience with your lender and the loss mitigation options that are available to you. Please give me a call today at (425) 654-1674 to discuss your situation.