The McQuinns are an elderly couple who have lived in their $179,000 home since purchasing it in 2005, financing $143,000 of the purchase price. Unfortunately the “perfect storm” developed which made it impossible for them to keep up with their $1,300 per month payments. As Bill’s health failed, his income from his home improvement business waned. At the same time, the adjustable rate feature of their mortgage caused the amount of their payments to creep up. This confluence of events forced the McQuinns to reach out to their loan servicer, Cheat Bank, for a helping hand in the way of mortgage relief if they were going to have any chance of saving their home.
Like so many victimized homeowners before them however, when reaching out, no help was to be found. Over the several years of seeking mortgage relief that followed, the McQuinns’ efforts were rejected on numerous occasions. The only offer of compromise consisted of reducing their mortgage payments by a hundred dollars or so per month which still had their loan payment at a level beyond their reach. Never once was a HAMP (Home Affordable Modification Program) modification comporting with federal law, offered.
After doggedly questioning Cheat’s foreclosure lawyers as to why this was so, extremely good news came, one might say as an early Christmas present to the McQuinns. The HAMP loan modification finally presented was truly eye-popping. First, their interest rate was slashed by almost 80% -- from 9% to 2%. Next, even though they have not made a mortgage payment for more than three years, putting their loan balance at over $200,000, almost $90,000 of that amount will be forgiven if the McQuinns make timely payments on their modified loan over the next three years. In essence, what this means is that even though they haven’t made a payment for years, the McQuinns’ loan balance is reduced by almost $30,000, on top of all interest and late penalties forgiven! And their monthly mortgage payment? Between slashing the interest rate and reducing the loan balance, the McQuinns’ monthly loan payment falls like a rock – from $1,339 per month to $700, including taxes and insurance.
The lesson of the McQuinns’ story is two-fold. First, the fact that the McQuinns were turned down for HAMP for over two years when they should have been qualified is not at all unusual. In fact we see it quite regularly. Secondly, and most importantly however, is the point that you can turn the servicer’s false HAMP denial into a great HAMP loan modification if you persevere and fight back.
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Next week: The story of the Hakes, who are now facing foreclosure because their loan servicer refused to accept a full loan payoff – twice.
Copyright 2012 Daniel L. McGookey