When it was announced in early 2009, the government’s Home Affordable Modification Program, or HAMP, sounded simple: Troubled homeowners could modify their mortgage terms to reduce payments, making it easier to avoid default and foreclosure.
But HAMP has been a disappointment, serving only a fraction of the millions of homeowners originally thought to be eligible. Nonetheless it is slowly chugging along, and homeowners with enough savvy, organization and persistence can make it work if they keep five tips in mind, says HSH Associates, the mortgage-information firm.
“While getting a loan modification is far from a sure thing, knowing these five tricks can help you maximize your chances of successfully navigating the process (or at the very least, adjust your expectations to reality)," HSH says.
Know the odds
The odds of qualifying for the program are not good. Many people do not succeed in getting their loans modified, and of those who do, more than half fall behind in their new payments anyway.
Document every step
Many borrowers tell horror stories about lenders who are hard to get hold of and lose documents. HSH suggests that homeowners expect this from the outset, plan to be patient, and keep records of all communications and copies of all documents sent.
Keep a file and, before being asked, add new documents that could be relevant to your modification, such as bank statements. When you send documents, order a “return receipt” so you can prove they were received. Call the lender every week to check your status, and keep notes on the conversation, making sure to get the name of everyone you talk to, as it could be someone different each time.