Mortgage and Foreclosure Law Blog

HAMP is the Home Affordable Modification Program. It is also known as the Making Home Affordable Program MHA and/or the Obama Modification Program. This is the treasury program designed for Fannie Mae, Freddie Mac, and many other loans, which is supposed to stabilize home prices, keep foreclosures down, and save 7 -9 million homes. This is way off from happening. Servicers of Freddie Mac loans, Fannie Mae loans, and investors/servicers who have voluntarily adopted this program are supposed to follow specific implementation guidelines from the Treasury Department. If these were all followed correctly aspirin makers would lose a ton of money, because the reality is poor implementation by these servicers are causing headaches all over the country.

In simplified terms the process is supposed to work like this:
1) Request help either verbally or by sending in documentation.
2) Servicer evaluates you for eligibility.
3) If Eligible you start a trial modification of three months.
4) Start permanent modification on the fourth month if trial payments made.

I can't tell you how many people tell me they think their bank is just screwing with them. So let's talk about a few things I'm seeing from servicers of which they are supposed do to ; but are not. I'll break it down into the four steps above and you will be able to see why so many people have trouble getting this modification on their own.

Finally I'm back! Wow that year end rush kept me from blogging; but hopefully I can get back to this more frequently now. I am getting calls from people who have realized they just can't afford their home and they want out. How do you do this?

Well that isn't a simple answer; but let me go over a few things that need to be considered. First of all you need to consider whether your state allows banks to come after you personally when a foreclosure sale doesn't satisfy the outstanding loan balance for your home. Attorneys in California (which I am not one!) may tell you to just walk away and let them foreclose. CA is generally considered a non-judicial foreclosure state and it is generally accepted that Banks can't go after you personally. What about other states like mine, Colorado?

There are generally three things you have to do in order to walk away. First, you need to not be able to afford your mortgage. You will need to be able to show this by giving your income and expenses to your lender. Second, you will have to put your home up for Sale and hope for a short sale to come through. I assume Short sale since so many people are upside down on their home; but if you have equity then this whole discussion is moot. After your home is on the market for 90 days and hasn't sold you can then generally ask for a Deed-in-Lieu. In both the case of a Short Sale or a Deed-in-lieu the bank will generally agree to not go after you personally for a deficiency. So, if this is your situation you should contact a Real Estate agent who can help with a Short Sale and if that doesn't work out give us a call about helping with a Deed-in-lieu. That's all for now.