Eligible borrowers will be asked to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify for the $75 billion loan modification program, which runs through 2012. The program only applies to loans taken out before January 1, 2009. Loans that were taken out after January 2009 are not eligible under this program.
Fannie Mae will be accepting applications for modification of Fannie Mae owned loans through June of 2010.
For borrowers who do not have a mortgage owned by Fannie Mae, the AP announced that House Democrats voted Tuesday to "narrow legislation that gives bankruptcy judges the power to force lenders to lower the interest rate or principal of mortgages for troubled homeowners."
The AP also said, "Under the terms of the agreement, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their mortgages."
I urge anyone using the mortgage modification process to document every contact with their lender. Preferably in writing. Insist on written responses. Do not negotiate a modification on the telephone.
Telephone conversations are difficult to document unless you ask the lender permission to record the call in advance of the conversation. Once again, it is important to document every communication to ensure that you have adequate documentation in case you are forced to seek protection under federal bankruptcy laws.
Second, don't sign a modification agreement or any other legal documents until you have had an opportunity to review the agreement with a competent attorney. There are legal aid attorneys who can assist individuals and families who can not afford to pay an attorney.
The U.S. Housing and Urban Development Agency has a list of approved counselors home owners can work with. Do not work with anyone who is not approved with HUD or by the Washington State Attorney Generals Office.
Please note that there are professional modification services available for individuals who can afford to pay for the service. You can contact the Attorney Generals Office or a reputable, fully licensed mortgage broker or loan originator for additional information. I will post more on this topic later today or tomorrow.
I will also review the Treasury Department's guidelines and provide an analysis of requirements as soon as the guidelines are available.
Compromise legislation on the bankruptcy bill is expected to come to a vote on Thursday.MSNBC article: http://www.msnbc.msn.com/id/29508039
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