It isn’t often, but at times the federal mortgage loan relief program known as HAMP can work wonders for those seeking mortgage relief on expensive homes. Such is the case with Patricia. When she came into our office last January she was current on her $300,000 home loan. Even though her monthly payment of $3,000 was affordable, it was stretching her budget. Most importantly, based upon her income it was clear that she qualified for mortgage relief under HAMP, which would help her breathe a little easier in making her payments. And as we see too often, her Bank was not allowing her to qualify for HAMP relief, even though she had sent in all the forms required for qualification countless times. This is because loan servicers (not the loan owner) actually make more money when a loan goes into default. In other words, your bank is financially disincentiviced to offer you a mortgage modification. In order to counteract this pressure to foreclose, it is necessary to hold a bank’s feet to the fire.
Though it took nine months to get her Bank to come around and give Patricia mortgage relief, the end result was well worth the wait. Under her HAMP modification, not only will her monthly payment be dramatically reduced from $3,000 to $2,380, but more importantly, the balance of her loan will be reduced by $83,000 for each of the first three years should she make her payments on time. This will be a total reduction of over $250,000 in the amount she owes! Quite obviously, when its feet were put to the fire, Patricia’s Bank pulled away dramatically for fear of getting burned.
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Kate Eyster and Lauren McGookey contributed to this article.
Copyright 2013 Daniel L. McGookey