Loan Modification and Recovery Process

[homerunstacy]

Has anyone been able to get Wells Fargo (or any other firm) to remove a 30 or 60 day late pay status after perm modification?

I would think getting the comments removed "paying partial payment as agreed" shouldn't be a problem after restructuring the loan but

I am wondering what the trend has been with the late status reporting. 

. 

[Lel]

Were you actually late at the time you applied for a loan modification?  CDIA guidelines specify that late payments that occurred prior to entering the trial period should still be reported.

Is this a modification through the US Government's Making Home Affordable program?

[Anonymous]

it is pretty hard to get mortgage lates removed.  And the notation that is was being paid partiall will probably be changed to loan modified under gov't program if it was a MHA modification. 

[homerunstacy]

Wells Fargo gave me an in-house 6-month Special Forbearance with a huge payment reduction by about $1100 a month. This is slightly more than half my mortgage payment. I could not get into the FHA HAMP program.  After many hours on the phone and talking to numerous people I found out it was because my deficit was in the red by $700.  I'm trying to switch over now though that things are looking better but it is a battle. I won't hold my breath. I've learned like many others that the loan modification process is a painful game of numbers, red tape, hard work, but mostly luck.   I only choose this option for loan modification in the first place as a last resort because I felt foreclosure could be on my horizon and the debt hole was getting bigger and bigger thanks to the market crash, loss of income, reduction in home value, and inability to get approved on traditional refi's. 

The FICO drop was a necessary trade off that hopefully will be worth in the long run.  Any idea how long it will take to see that FICO score to recover if the 60 day late stays?  A simulation shows that if I am at 0% utilization I should be back up in the 700's in 12 - 24 months.  I’m not going to be buying a new car or applying for any new credit anytime soon but I try to protect my scores as best as I can. 

It is crazy but I am actually worried that I did so well at reducing my liabilities that I could end up hurting myself for perm modification solutions. I just did my financial worksheet again for March and I now show a surplus of $100. This is even with paying my full mortgage amount.  I did things like cancelling monthly AFLAC cancer insurance, stopping payroll contributions to a credit union savings, eliminating premium channels and other  utilities, shopping for groceries at Walmart instead of Wegman's, eliminating all entertainment expenses, and using cash for everything. The only thing I didn't touch was my 401k.  My biggest win was taking 100% of my tax refund money and paying off the credit card debt so I wouldn't carry anymore balances. For a while I had to lean on those credit cards when our household income was reduced by 40k.  I estimate in 3 months to be at 0% utilization again. Per my special forbearance agreement I have to submit this financial worksheet every month so they will see a huge change soon. 

Best case scenario Wells Fargo will switch me over to FHA HAMP.  They could also ask me to stay on the special forbearance trial for the full 6 months.  Even more important than the FICO score or perm modification, I am really concerned that if I stay on this current in-house solution I won't have the protection I would have under the FHA HAMP program.  They could potentially hit me with  a balloon payment at the end of the 6 month forbearance instead of restructuring that back into the loan. I fear that if I keep paying under by the $1100 each month that was agreed upon and they don't restructure that back in or make an FHA claim on it I could be back to square one again.  An expense like that could put me back into the hole and worse yet  make me ripe for foreclosure. 

I don’t know what to do about March.  Pay the full mortgage amount or pay the agreed upon reduced amount.  Any thoughts? Any time I try to call to Wells Fargo I seem to get a different answer to questions which makes me even more nervous.  One told me to pay as agreed, another told me to pay anything but the special forbearance amount, and yet another told me to pay my regular full mortgage amount until I get approved for FHA HAMP.

[Lel]

It's impossible to say how a lender is going to respond to a modification request.  But in my opinion, I think you have a better-than-average chance at modification.  You've demonstrated that you are capable of living within your means and that you are willing to make the sacrifices necessary to make your payments, and lenders like to see this.  Having a small surplus after some serious cost-cutting should not disqualify you from a modification.  On the contrary, having too great of a monthly deficit is more likely to lead to a rejection, because the lender will assume that you are at risk for default regardless of whether you receive a modification.  Depending on your current interest rate and loan balance, a $700 deficit may have been too much for WF to approve your modification.

Good luck.

[homerunstacy]

Thanks Lel. I hope so. I guess I will just stick with the reduced payment for March.  I'll continue to use that surplus to my advantage and make another dent in my cc debt.  I plan to just send proof of my my tax return, pay stubs. financial worksheet, and harship letter outlining the changes.  Hopefully I will be back on the forums with good news at some point in the near future.