Ask Jill: Mortgage Modification Questions Keep Coming

A House committee approved a bill last week that would allow bankruptcy judges to order banks to reduce mortgage payments.
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This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.


I continue to write about mortgage modification because the questions keep coming. (See earlier posts here and here.) It's not surprising-housing has been at the epicenter of the financial meltdown and is likely responsible for last week's most unwelcome news: the number of bankruptcy filings hit their highest level last month since Congress overhauled the system in 2005.

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Some of the questions I receive require research, but let's start with a few lay-ups, like this one from Dan:

Is the program actually now in effect and what is the official name of this "mortgage modification program".  How should I refer to this when I contact my lender?  Is the lender the starting point for this process?

In the article you write of temporary assistance for the unemployed.  If I cannot qualify for the "mortgage modification program" then I would like to try and apply for this assistance.  How do I proceed, where should I start in applying for this temporary assistance?

The program is part of the Administration's Making Home Affordable Program, which has morphed in various ways. The newest part of the plan is called either ":Home Affordable Foreclosure Alternatives Program" or the "FHA Program Adjustments to Support Refinancings for Underwater Homeowners" -- it looks the plan is now be referred to as "FHA Refinance Option." If you qualify, the place to start is with your lender, which will require time, patience and perhaps, a little antacid!

To apply for temporary assistance, you need to complete two government forms and supporting unemployment documents and send to your mortgage provider. Keep copies of everything you send and make a plan to nudge the bank every few days.

John wonders:

"What is the benefit for the banks to go into foreclosure, than help people and stay in there home and pay the mortgage? Is there any other option...after been denied once? Is there any way to fight this legally?"

It's widely taken as a given that foreclosure is the worst alternative for banks. That said, because many loans don't involve one bank, but many lenders, which has caused problems. Sometimes the institution that holds the primary loan wants to refinance, but the second lien-holder doesn't, causing the process to grind to a halt. Troubled homeowners shouldn't give up, even if refused previously. Despite the pain involved in the process, many have found success in second or third trips to the well.

Finally, from Roy:

i have recently signed a deed in lieu on my home. how do i get the $3000.00 from the government? can you please point me in the right direction?

With Roy's deed-in-lieu, he voluntarily transferred ownership of the property to his mortgage servicer,  provided the title is free and clear of mortgages, liens, and encumbrances. The government's program should entitle Roy to $3,000 to help with relocation costs. Here's the catch: mortgage servicers and investors write their own guidelines under the Federal requirements to determine how to implement the program. That means you need to contact your mortgage company. See comment above about perseverance and antacid!


(CBS)
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
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    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.