Life happens. You have an unexpected expense. A car repair, a medical issue, or maybe you lost your job. You miss a few mortgage payments but luckily, you get back on your feet and you are ready to resume payments.
You would think that would be good news to your mortgage servicer. Since you are able to make your payments again, you think they could just tell you to send in a little extra every month to get caught up.
Unfortunately, it’s not that easy.
Here are some common challenges you might be facing:
The bank is rejecting your partial payments
You may be trying to pay your mortgage payment plus a little bit extra each month to get caught up but the bank isn’t accepting your payments.
The bank is telling you that you have no options other than to pay back everything you owe at one time
The bank may be bombarding you with collection calls where they tell you only have two options – pay ALL the money you owe or let the home go to foreclosure.
The bank told you to submit an application but it feels like you’re in a never-ending document collection process that is going nowhere.
You may have followed the bank’s instructions and completed an application for a loan modification but it doesn’t feel like it’s moving forward – you may feel like you are in a never-ending document request cycle.
The bank issued some sort of denial but won’t explain to you why you were denied.
Maybe you got all the way through the loss mitigation process (nice work!) and the bank gave you a short, unclear “Decision Letter” stating you were denied and that your only option is to sell the home or reinstate. They may have offered you 30-days to appeal but you’re unsure what to say or how to format an appeal.
The bank told you that you’re in review for a modification and then issued foreclosure paperwork.
You may have received assurance that you successfully applied for a repayment plan or loan modification. You may have been told that your foreclosure status is “on hold” while the bank is reviewing the documents. When you think things are moving forward, it can feel very scary to receive foreclosure documents.
Experiencing the above things can be very stressful. But don’t give up! The best thing you can do is educate yourself so that you can protect yourself while you get through the process.
- Don’t send partial payments: If you are more than one month behind AND you cannot pay the FULL amount you owe (including all fees and costs) – you CANNOT just start paying your mortgage lender back without an agreement in writing. This is dangerous – the bank could keep your partial payment and still foreclose on you.
- Get a repayment agreement (like a loan modification) in writing before you start paying them again: You need a loan modification or a repayment agreement (repayment plan) in writing in order to get caught up on payments. This has to be applied for, negotiated, approved and accepted by you and your bank. Do not rely on any verbal repayment agreements given to you by your bank.
If you’re simply trying to “get current” meaning you want to resume your payments without having to pay the full amount you owe all at once, you will likely need to complete an application for a loan modification.
A loan modification is a new agreement written by your bank that typically extends the maturity date of your loan, takes the amount you owe and puts it on the end of the loan – allowing you to resume a payment that is very close to the original payment you were making prior to your default.
The process of applying and negotiating a loan modification can be difficult
The loan modification / repayment plan process is document heavy. The numbers you report for your income and expenses matter. The more complicated your financial situation, the more complicated the process gets. Banks are big and disorganized so if you’re going to do this process by yourself – give yourself plenty of time.
To be successful in the loan modification process, you need to know…
- When the bank is giving you accurate information and when they’re lying to you
- What type of documentation is needed AND how to format the documents correctly so the file moves forward and doesn’t get stuck
- What a reasonable timeline is and when something is starting to take too long
- The individual bank’s escalation procedure(s) AND how to escalate your file above the ground-level representatives
- What questions to ask to ensure the bank is handling your file correctly AND when to ask the questions
- How to call the right department at the bank, who to reach, and when the best time to reach them is
You also should be *very aware* of scam artists or big, out of state companies that do this work. This is a field of practice that is riddled with others trying to take advantage of stressed out homeowners – don’t let yourself get taken advantage of.
It is always best to hire a local professional who can have a conversation with you about your individual situation. If you’d like to chat about yours, feel free to call me at (425) 654-1674.