Navigating the Mortgage Modification Mess ¡V a Cautionary Tale: A Cautionary Tale

By Charles G. Smith

Navigating the Mortgage Modification Mess A Cautionary Tale takes the reader on a serious, yet sarcastically humorous, trip through Federal and internal bank programs for modifying home mortgages. It represents a 3-year timeline of the authors attempt to save part of the American Dream of home ownership. The process involved submitting, and often resubmitting, a large amount of paperwork to answer underwriter questions and justify a hardship request for mortgage modification. During the process, the author saved notes from phone conversations and copies of correspondence from financial institutions. This Cautionary Tale is a compilation of these communications that underlines the gross inefficiencies inherent to HAMP, HAFA, and other mortgage modification programs

With the current housing market, there are other people facing foreclosure and the need to modify existing mortgages. The author hopes the experiences described in this Cautionary Tale will help others avoid pitfalls as they try to navigate through the many available mortgage modification programs.

• Language: English
• Publisher: Xlibris US
• Release date: Dec 14, 2012
• ISBN: 9781479754465

Charles G. Smith

Charles G. Smith was born in Vermont in 1940. He grew up in an era when college graduation, marriage, family, and home ownership were considered normal parts of life. Real estate was considered to be a good, safe long-term investment. After receiving a B.S. Degree at Allegheny College and the M.S. in Analytical Chemistry from the University of Michigan, Charles worked 32 years as an industrial analytical chemist. The home ownership part of his family’s American Dream fell apart after 13 happy retirement years. The ensuing mortgage modification ordeal transformed the mild-mannered chemist, family-man, and part-time golfer into an author. This is his first literary work.

Book preview

Navigating

the Mortgage

Modification Mess

A Cautionary Tale

Charles G. Smith

Copyright © 2012 by Charles G. Smith.

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

To order additional copies of this book, contact:

Xlibris Corporation

1-888-795-4274

www.Xlibris.com

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Contents

Preface

Chapter 1 History

Chapter 2 Home Affordable Modification Program (HAMP) Introduction

Chapter 3 HAMP Application and Timeline

Chapter 4 HAMP Application Result

Chapter 5 Second HAMP Application

Chapter 6 Bankruptcy and Third HAMP Application

Chapter 7 Home Affordable Foreclosure Alternatives (HAFA) Short Sale

Chapter 8 HAFA Deed-in-Lieu Option

Chapter 9 What is the Next Step?

Chapter 10 Proprietary Mortgage Company Deed-in-Lieu Program

Conclusions

For family and friends who provided emotional and financial support during our mortgage modification ordeal.

Preface

The Oxford Dictionary¹ defines the word inefficient as an adjective meaning not achieving maximum productivity; wasting or failing to make the best use of time and resources. From the author’s perspective, the customer service representatives, managers, and procedures at a prominent bank and mortgage company could easily be associated with this definition. For the purpose of the following narrative, this mortgage organization will be referred to as The Bank That Shall Not Be Named (TBTSNBN).

Based on notes taken during phone conversations with numerous people employed by TBTSNBN and written correspondence from that organization, the following pages detail a three-year timeline of our attempts to modify or obtain release from an unaffordable home mortgage. With the housing market in its current state, I’m sure there are other families out there with home mortgages they cannot afford.

I hope this record of our lengthy trip through Federal and internal bank mortgage modification programs will offer insights to these people on how to proceed. Hopefully, our missteps will allow others to avoid the pitfalls of the various mortgage modification programs. Although unlikely, I think our ordeal might be useful to government agencies involved in making policies affecting so many Americans. As you will see by reading the following pages, implementing a Federal program fast, that is a knee-jerk reaction to something seen as a financial emergency, is not always the right thing to do. Taking the time to fully define guidelines before passing legislation will, in the long run, make a program function in a positive way. Taking the extra time to get the program right should yield the desired end result without applicant frustrations and inefficiencies experienced with the home mortgage modification programs discussed in the following paragraphs.

Chapter 1

History

I retired after working twenty-eight years as a research chemist for a prominent chemical company. Our family lived happily for over twelve years on a pension, IRA investments, some part-time consulting, and, in the later years, our Social Security income. Because of the low interest rates, we refinanced our mortgage and a home equity loan on our primary residence in 2007. Consolidating debt payment through a home equity loan and reducing monthly payments with a low interest rate were considered good financial policy. Like others of our generation, we were raised believing that owning real estate was a wise investment. In hindsight, our refinancing was a bad decision because we operated from fixed income sources.

With the economic downturn in 2008, our stock and IRA investments lost value and consulting income decreased when training courses became a low corporate priority. Our credit card debt increased. We continued making payments on the home mortgage and home equity loan, still believing that owning