So your Mortgage Lender Won't Work With You on a Modification?

            To be fair, as a bankruptcy attorney I don't typically run into people who have successfully received a mortgage modification with no hassle, are making payments and are moving happily down the road of life.  To the contrary, I meet with those who are having difficulties with a mortgage company.  But since I can really only blog about what I do on a day to day basis, let me say that if you are getting nowhere fast with your mortgage company you are not alone.

            People are not stupid.  They know that if they are going to get behind on their mortgage payment that they should call their mortgage company and see if something can be worked out until they can get back on their feet.  This makes sense, right?  Everyone wants to make their mortgage payment.  However, the way that mortgage companies operate doesn't always make sense to people.  The first surprise most people run into is that typically a mortgage company doesn't want to hear from you if you are going to be late on a payment.  They simply want their money.  If you don't pay they have a department whose job it is to call you and get your payment.  They don't want to hear your sob story about how you got laid off, about how you have children or about how zombies raided your 401k.  Bottom line is that they are dealing with calls all day with sad stories and they really don't care about yours.

           Another thing that surprises people is that your mortgage lender may not consider attempting to work with you until you are about three (3) months behind on your mortgage.  I am well aware that this is counterintuitive.  It makes much more sense to be proactive with your lender than it does to stick your head in the sand.  However, in addition to not caring about your problems, your lender doesn't want to modify your mortgage without you having any skin in the game.  What do I mean by this??  I mean that your lender believes that if it is going to take less money per month than owed that you better be willing to ding your credit.  Think about it.....if it was easy to obtain a mortgage modification (i.e., you call up your lender and let them know you are short on cash that month and that you can only pay $700.00 than the normal $1,000.00) then everyone would want to do it and mortgage companies would not get full payments.  So, as crazy as it is that your mortgage lender may not agree to do anything for you until you are behind on payments, this is the reasoning behind it.

            If you are going to attempt to obtain a mortgage modification you better be ready to bring the paperwork......again and again.  Most mortgage companies will want a hardship letter, pay stubs, bank statements, a listing of your expenses, income, a DNA sample (ok.....not a DNA sample, but you get the point).  Oh, and after you have submitted all of that information they are going to have misplaced it and ask for it again....only this time with updated bank statements and pay stubs.  And after you submit it that time you aren't going to hear anything for a few months.....and when you call the loss mitigation department to follow-up you will be told that no decision has been made, but that you need to re-submit your hardship packet.  Actually, it is not uncommon to have to submit the same paperwork upwards of five, six or seven times.  I wish I was making this stuff up.

          I often meet with clients at Halcomb Singler who are in the midst of this process and tell me that it will be ok because the mortgage company doesn't want my house....they have enough of them already.  I agree that mortgage companies would prefer to have interest income from your payments over your house.  But don't let this thinking fool you into believing that a mortgage company will hesitate to take your house.  Remember that a mortgage company is not a person...it does not have sympathy.  It does not see in shades of gray.....it sees in black and white and green.  It has a board of directors who wants to make a profit and if filing a mortgage foreclosure on your house is how money is going to be made then that is what will happen.

          The good news is that as frustrating and overwhelming the process can be is that it does sometimes work.  People are able to come to modifications with their mortgage companies and are able to make payments that they can afford.  In addition, even though I am aware of how difficult the process of obtaining a mortgage modification can be, there is really no downside to attempting to obtain a modification.  Even though the bank may ask for your paperwork 5 times, isn't this worth it if you want to stay in your house.  The worst thing that can happen is that the bank can say no.  And even if you are not able to obtain a modification, there is another option....Chapter 13 bankruptcy.

           Chapter 13 bankruptcy is a repayment plan that allows people to make payments over the course of 36 to 60 months towards debt and to receive a discharge of their debts at the end of that time.  Potential benefits of Chapter 13 to homeowners is that mortgage arrearages can be paid through the repayment plan with no additional late fees, Chapter 13 will stop a mortgage foreclosure in Indiana so long as the bankruptcy is filed prior to sheriff sale and if other debt is owed it will also be dealt with in a Chapter 13 bankruptcy.  Even better you don't need any cooperation or approval from your mortgage company to include them in a Chapter 13 bankruptcy.

              So, if you are having a difficult time obtaining a mortgage modification do not lose hope.  Even though I believe homeowners should attempt to work out their mortgage issues with their lender, it is not always possible.  In the event this blog hits close to home for you and you would like to explore your options with Chapter 13 or Chapter 7 bankruptcy I am happy to meet with you at Halcomb Singler's Carmel, Indiana office.  I will sit down with you to review your income, expenses, assets and debts and make a recommendation as to whether or not bankruptcy may benefit your situation.  If you live in Indianapolis, Carmel, Zionsville, Fishers, Noblesville, Tipton, Kokomo or somewhere close by call (317) 575-8222 to set up your free initial consultation or click here and we will contact you for an appointment.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.