Below is an initial e-mail I received from a client. He originally tried to modify his loan on his own and when he first contacted us, he gave us some background on his situation. To protect his privacy, we have excluded his name. However, his e-mail is a common experience that homeowners are having when they try to reach their banks and try to get something done for themselves.

Anyway, here’s the e-mail to give you an idea of what homeowners are going through with their lenders:

“I’ve been trying to modify my loan since October 2008. After sending in what I thought was the application form, including supporting documents: Proof of income, monthly bank statements and a hardship letter. After calling the bank numerous times to get an update on my modification, I was told that it was still sitting in a pile of other modifications and it would be looked at as soon as they get around to it. Finally, after 3 months, in January I received a letter from the modification person at Washington Mutual that they were reviewing my file and upon analysis they would determine if they needed anything else to reach a decision. I tried contacting my loan officer every week trying to get a status update, which she has only returned my call twice, I then called customer service and they said, while I was talking with them on the phone, the loan officer was typing in the system that my file was being denied because it was incomplete due to missing income statement, bank statements and hardship letter. I then tried calling the loan officer stating that of course they would not be up-to-date if I sent the file in October. The loan officer never called me asking for recent paperwork and just decided to close the file based on this information. My current loan went from a payment of $1221.00 to $2903.00. Now I’m 4 months behind in my mortgage and need some serious help cutting through the RED tap. My mortgage is more than 48% of my take home income, which is more than the 31% that the recent Home Modification calls for, therefore I should be a perfect candidate for a modification.”

This is a common story and one our company hears daily. Homeowners are under the impression that if your monthly mortgage payment is more than 38% of your income then you qualify under Obama’s plan. Most people’s payment is more than 38% of their income these days and as we all know, the banks will not be able to modify the terms for everyone in this case. In addition, the income percentage is not the only basis for qualifying. First, most banks have not put this plan into place so it will still be awhile before customers benefit from it. Technically, banks have until December 31, 2009, before they have to decide if they want to participate in the plan so they are not moving very quickly to put these guidelines into place.

From a homeowner’s perspective, the experience I noted from the client above is a common experience for people that try to modify on your own. As I’ve said many times, I recommend that homeowners call their bank to see how open they are to helping you. However, from most clients who call us after trying to talk to their bank, they want to pull their hair out because the experience is so frustrating. 

We can answer your questions on how to make your experience less agonizing when you call your bank. The main reason it is recommended to go through a modification company is because we should always be able to get you better terms on your loan than you can get yourself because we have been doing this awhile and we know the hot buttons for most banks. That being said, it doesn’t mean you have to go through a modification company. You can try to do it on your own. At the same time, if we can assist in making the process less painful for you when you do talk to your bank, we are here to help.