Bank of America Offers Tips to Homeowners to Streamline the Modification Process

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The Home Affordable Modification Program (HAMP) provides borrowers who have experienced a financial setback an opportunity to possibly achieve more affordable mortgage payments by ensuring the payments are no more than 31 percent of their monthly gross income. Homeowners who are familiar with the qualifications and requirements are more likely to move through the process quicker.

“The first step struggling homeowners should take is to have their financial documents in order”

In today’s economic environment, many homeowners are struggling to keep up with their monthly mortgage payment. New and established homeownership retention and foreclosure prevention programs offered by mortgage servicers and the federal government’s Making Home Affordable (MHA) can help ease some of the burden.

Within MHA, the Home Affordable Modification Program (HAMP) provides borrowers who have experienced a financial setback an opportunity to possibly achieve more affordable mortgage payments by ensuring the payments are no more than 31 percent of their monthly gross income. It begins with a trial period when borrowers are required to make adjusted monthly payments for three months. During the trial period, borrowers must submit specific documents to verify their income to qualify for a permanent modification of their loan terms. If the information and the trial period payments are not received by the servicer in a timely fashion, borrowers will be unable to continue in the program.

“The first step struggling homeowners should take is to have their financial documents in order,” said Ken Scheller, who manages the Home Retention Division for Bank of America Home Loans. “Servicers will ask specific questions about income and hardship to help better understand the homeowners’ situation and determine the best options available.”

Program Eligibility
Homeowners who have fallen behind on their mortgage payments or are at imminent risk of falling behind on their mortgage payments due to a financial hardship could be eligible for HAMP. Guidelines to the program were created by the government and apply to homeowners who meet the following qualifications:

  •     The property securing the loan must be occupied as the borrower’s primary residence.
  •     The unpaid principal balance of the loan must be than $729,750 on the first mortgage. There is a higher limit for two- to four unit properties.
  •     The loan must be a first lien mortgage loan that was made on or before January 1, 2009.
  •     The monthly payment for the first mortgage (including property taxes, hazard and flood insurance and condominium or homeowners association fees) must be more than 31% of current gross income.
  •     The borrower will be asked to certify a financial hardship has made or will make it difficult to continue making the mortgage payment.

Steps to Make the Process Easier
Mortgage servicers are seeing an ever-increasing number of requests for assistance. Homeowners who are familiar with the qualifications and requirements are more likely to move through the process quicker. When working with a servicer:

  •     Call the servicer at off-peak times: Home retention specialists are experiencing substantially increased call volumes. Servicers have increased staffing levels to help meet the demand; however, calling at off-peak times should decrease hold times for borrowers. Off-peak times are generally in the evening in the Eastern Time Zone or late afternoon in the Pacific Time Zone.
  •     Prepare documentation in advance – The loan servicer will ask specific questions about a borrower’s financial situation, so a borrower can help expedite the process by having the following documents prepared ahead of time:
  •     Your loan number and property address
  •     2 most recent pay stubs showing year-to-date earnings
  •     Your most recently filed and signed federal tax return with all schedules
  •     If self-employed, your most recent profit and loss statement
  •     Documentation of other income, such as alimony or child support (if you wish to have this income considered), benefits (e.g., unemployment, social security, disability, death, pension, public assistance or adoption assistance) or rental income
  •     Brief explanation of your current financial hardship
  •     Make the trial modification payments – The Home Affordable Modification Program has a minimum three-month trial period. Borrowers need to make each of the three payments on time to be considered for a permanent modification.
  •     Complete Paperwork Accurately – After the initial call, a package of documents will be sent to the homeowner. All of the documents need to be fully completed and returned to the servicer by a specified time to be considered for a permanent modification through HAMP. According to Bank of America, about 80 percent of submitted applications are misstating or missing important information. Borrowers need to review everything carefully and make sure all supporting documents are signed. Incomplete paperwork will delay the process and may even result in borrowers not qualifying for the permanent program.

"The trial modification may be based on information the borrower provides over the phone. But the borrower’s responsibility doesn’t end with acceptance of the trial modification offer; the government guidelines require them to provide full documentation and verification of the financial information, along with all required trial payments, before a permanent modification program can be approved,” Scheller cautioned.

Other Loan Modification Programs Available
If a homeowner does not meet the HAMP eligibility requirements or fails to complete the payment and documentation requirements, Bank of America may have other loan modifications or workout options available that fit their individual situation. Before HAMP was operational, Bank of America completed 232,000 loan modifications last year through other programs, and has completed about the same number of non-HAMP modifications in 2009.

"If Making Home Affordable is not available to you, don’t give up,” said Scheller. “It’s important to ask about other options available to help retain your home.”

Getting Help Doesn’t Mean Spending More
Many foreclosure relief scams target financially-strapped homeowners. Bank of America advises that fees for foreclosure assistance typically should be charged by these companies and law firms after modifications are negotiated and completed, so be wary of anyone asking for upfront fees. A few important things to consider before paying for home retention assistance:

  •     Free help is available through most of the major loan servicers, HUD-approved counselors, and non-profit organizations such as the Homeownership Preservation Foundation Credit Counseling Resource Center. They can be reached at 888-995-HOPE or by visiting their Web site, http://www.995hope.org
  •     Never make a mortgage payment to anyone other than the loan servicer.
  •     Do not sign over the deed to the property to any individual or company unless working directly with the servicer.
  •     Beware of any organization that requires payment upfront for services, creates a high-pressure environment where papers are signed, or asks for the deed to the property as part of the modification process.

Bank of America can help customers struggling financially with options to make their payments more affordable. For more information, call 800-669-6607 or visit http://www.bankofamerica.com/homeloanhelp/

Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 53 million consumer and small business relationships with 6,000 retail banking offices, more than 18,000 ATMs and award-winning online banking with more than 29 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to more than 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients in more than 150 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

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