Qualified for mortgage modification
This is the second article about my experience with the HUD mortgage modification program. You can read my first article here: Eligible to apply for mortgage modification.
I met with my mortgage loss mitigation and foreclosure prevention counselor yesterday morning after turning in my information packet. My packet was complete so there were no delays in talking with my mortgage company.
I qualified for the mortgage modification by the end of the session. My new payment will be $260 less than my current payment.
Here’s how it works:
- Visit HUD website, or call 1-888-995-HOPE to determine eligibility
- If eligible, contact HUD-authorized local agency for an application. HUD provides names and numbers if you’re eligible
- Complete application and turn in all required supporting documents
- Meet with counselor
- Counselor reviews application and all supporting documents, including a fresh credit report
- Counselor decides if you meet qualification requirements
- Counselor calls your mortgage company if you qualify
- Mortgage company makes a decision for modification, requires more information, or turns you down
- If you qualify for a modification, your mortgage company recalculates a new payment amount at a lower interest rate and lower principle payments based on your lower income level
- The modification is temporary based on whether you make your first 3 payments on time. Mine will be due December 1, January 1, and February 1
- You do not have to catch up the payments you missed before qualifying for the modification
- Receive packet from mortgage company in the mail, read it thoroughly and take it to your HUD counselor
- You may be required to make a contribution payment equal to your new mortgage payment or as much as one of your old mortgage payments. I’m not sure about these details. I’ll find out when my packet arrives from the mortgage company
- Once you make the first 3 payments on time, your modification is in force for 5 years
After 5 years, your mortgage payments go back up, but I’m not certain of the details. They will be in the packet coming from the mortgage company. However, your agreement in 5 years will be a fixed-rate mortgage that will be affordable. This is really important for those who have variable rate mortgages.
If you missed mortgage payments and cannot catch them up before your lender may foreclose on you, it is important to contact your local HUD-authorized mortgage counselor and apply for a modification. This program gives you time to increase your income, pay off other debts and establish savings.
One important note: BEWARE of SCAMS!
Mortgage modifications and refinancing through the federal program is free. Scam artists will ask you to pay hundreds to thousands of dollars and say they can get your modification done more quickly and get you a better deal. Don’t believe it. All that will happen is you and your money will soon be parted, and your mortgage problems will not be solved.
Update
After my bankruptcy, I only have about $8,000 in federal and state taxes to pay, and my mortgages. I’m turning the student loan mess over to my friend’s parents. They are wealthy and can afford it far better than I can.
My current income is up to $2190 per month. I’m still a couple of hundred dollars short of what I will need to pay for everything in the budget each month, but some of the budget can be put off while I increase my income over the next few months.
Last month I made $1950. I’m up $240 from then and I expect to get at least 1 or 2 more students in November. One student will bring in just what I need to meet the entire budget every month. Two students will bring in extra money that I can use to reestablish savings and accelerate paying off my back taxes.
I’m establishing savings first, and then accelerating paying off my taxes. My taxes will go down this year and will calculate out to refunds for 2009 for both federal and state. My refunds will be applied to my outstanding balances, lowering my debts faster.
I am launching another marketing campaign this week to find those couple of students I need. I also have enough to have some business cards printed. I was giving out fliers with my information on them. Now I’ll be able to put fliers up on boards and give business cards out to people who ask about my services.
