Things looking up for struggling Md. homeowners?
If you're struggling to pay your mortgage, the best help -- of course -- is a job with a good income. Failing that, homeowners often seek loan modifications or other assistance from their lenders, but many have complained that the process is Kafkaesque.
If this describes your life, see if one or both of these options might help:
Mediation. Owner-occupiers in Maryland can ask for court-supervised mediation with their lender if their foreclosure case started on or after July 1, when the new state law went into effect.
HOPE LoanPort. The web portal lets participating housing counselors and mortgage servicers nationwide trade loan-modification information electronically. The promise there is no more faxing the same paperwork over and over and over in the hope that it might actually reach someone who will put it in your file.
Here's what you need to know about each program:
First, mediation. I covered the basics in a Q&A, but state regulators have since shared additional information that you might find useful.
The "order to docket," the foreclosure filing that officially starts the quasi-judicial process, is the key here. If it was filed before July 1, you don't qualify. If it was filed on or after, you do.
Keep in mind that you have only 15 days to request mediation once you've received the form, so you want to be on the lookout.
You could get it with the order-to-docket paperwork, which is served on homeowners. Or, if your lender hasn't completed a required loss-mitigation review of your loan at the point the paperwork is filed, you'll get it 28-plus days later by certified and regular mail when the analysis is done.
The Maryland Office of Administrative Hearings is spearheading the mediation effort. Administrative law judges will be the mediators. Just two dozen cases have been scheduled so far, though, because fairly few borrowers qualify yet.
As for HOPE LoanPort, an outgrowth of the HOPE NOW alliance: Eleven mortgage servicers are participating, including large players such as Bank of America. So are about 250 housing counseling agencies, the nonprofit says. Participants are listed here. (The housing-counseling list is far shorter than 250, but I'm guessing that's because most of the agencies in NeighborWorks America's large network aren't listed separately.)
If you're hoping for a loan modification, a repayment plan or other assistance from your servicer and it's on the list, find a housing counseling agency that has also signed on.
It's early days still, but the initial reaction looks promising. Home Partnership Inc., a Harford County housing counselor, has had two clients get loan modifications since it started using the portal in July -- light speed compared with the usual months-long slog.
"We've never seen things go this quickly before," says Kim Cowie, a counselor there.
She said it's an improvement not just because there's no debate about who sent which paperwork when, though that in itself is a big step forward. The system allows counselors and servicers to communicate by email, rather than trade voicemail messages, and there's also an opportunity to contact an "escalation officer" if something's not going well, she says.
Planning on trying mediation or the portal? I'd like to hear from you.
Categories: Foreclosure help, Mortgages, The foreclosure mess
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Comments
When will the Feds realize the bigger problem is voluntary walk aways? Fiscally responsible people aren't going to keep throwing mortgage payments at a house that will never recover its value. Over the next 2-3 years voluntary walk aways are going to skyrocket once the 5-7 yr ARMS adjust.
Posted by: Mark | August 27, 2010 10:42 AM
Mark - Have you taken a good look at interest rates? There's a chance payments will go DOWN. Why would you walk if you payments are less?
Posted by: JB | August 27, 2010 11:44 AM
Many of the adjustable mortgages are interest-only ARM's. Even if the rate adjusts to 4.50%, there's no equity and in most cases negative equity. So even at 4.5%, most owners will have to wait 10 years to make up a twenty percent decrease in equity. It makes more sense for the fiscally responsible person to purchase another home, at bottom of the market prices, then walk away from the orginal home. This snowball has already started and it's not stopping anytime soon.
Posted by: Mark | August 27, 2010 12:07 PM
To be even more clear, the payment isn't the issue. The total return on investment is. The credit hit for 7yrs is better than getting 80 cents back for every dollar you spend.
Posted by: Mark | August 27, 2010 12:10 PM
Mark is correct. Individuals need equity in their homes to qualify. Also, for those with a great deal of equity, refinancing is of very questionable benefit. If you have paid off or are close to paying off your home, why take on a new debt, even at 4%? There are few places you can make up the difference in the current economy.
The system is trying to game you with with the low interest rate lures. I mentioned that the only way to win at a losers game is to NOT PLAY!
Rule#1 should be : Pay down all debt.
Posted by: Darwin Rules | August 27, 2010 1:17 PM
Thanks goodness for the Hopeloanport. It's about time. The whole faxing thing is infuriating as you would wind up faxing huge amounts of paper numerous times only to be told that they didn't receive it. Finally, some common sense.
Posted by: Murfreesboro Homes | August 27, 2010 4:10 PM
I agree with a lot of what Mark has to say. The drop is equity is so large in many cases that people just don't have the time and simply can't afford to wait for things to recover. This is ofter true even if their interest rate was zero and everything penny of the payment was going toward principal as it still might take the ten years to get back to even. Very sad situation.
Posted by: Gulf Shores AL | August 28, 2010 7:30 AM
I would say to Mark that "never" is a long time, and walking is immoral, because values will recover in ten years or less. By his illogic, we should abandon vehicles that are worth less than when we drove them off the lot, except homes will recover value and vehicles will not.
Posted by: Dennis Smith | August 30, 2010 9:30 AM
Please check into and do a blog about whether any homeowner has actually gone through the new mediation-before-foreclosure process. Is there anyone that it has actually helped them stay in their home and get a reasonable house payment? It is such a new program and because I might be headed down that path I wonder if it will really help me. I could use some advice on how to prepare for it, or how to increase my chances of success. Please alert me by e-mail when you write about it. THANK YOU
Posted by: Leda Rose | October 7, 2010 8:45 AM
I already contacted Leda directly, but just for anyone else following along -- I do hope to write more about mediation once more than a handful of folks have gone through the process.
It would be helpful to sit through a mediation. If you're going and wouldn't mind me tagging along, let me know.
Posted by: Jamie Smith Hopkins | October 7, 2010 2:03 PM