Home Loan Modifications - How I Won My Battle

Just over a year ago, I lost my job. As I frantically scrambled to hold my life together, I knew that a must-do-right-away was to sign-up for one of these seemingly pervading modification plans and not have to fire-sell the house at a loss of tens of thousands of dollars. One would like to think that for people affected with life-shattering events, such avenues would be made as seamless as possible. It comes as a surprise for no one that reality is anything but. A statistic that has oft been thrown around is that despite millions losing their homes, only 85,000 modifications have been approved. Still, three months after I started the modification process, I won my approval, but not before burning my lungs and throat out shouting and screaming. My new payment, though still provisionary, has been halved. Here, I would like to briefly relay my story. Hopefully, something here can be of help to others.

Politics

Let's begin with a quick pulse-check on political complications surrounding this subject. First, like any program that is set-up to put out fires after they have started burning, it's going to bumpy, scratchy, with a host of frustrations and growing pains. Secondly, the banking industry is locked in a battle with the government. The government tongue-lashes bankers like school-going children and is trying to impose a ton of regulation, while bankers (or Wall Street rather) fight back with lobbyists. Since government bailed out the banks, they do expect them to forward the favor and help fallen borrowers. But, with stirred emotions and all the politics, don't expect executives to be reaching out and doing the right thing. Also, the rushed set-up under the fires leads to poorly trained staff and an ill-crafted process.

The Modification Deptt. Please

So, I promptly called my lenders modification department and was told that forms are being sent out in the mail. The forms never arrived so I called back a week later: they gave me instructions on submitting a hardship letter, proof of any income (such as unemployment benefits, distributions from savings or retirement plans), and an income/expense worksheet. Now, I need to mention something important here. When I was researching this subject, I came across a lot of chatter online and among friends that in order to get the bank to work seriously on your modification you have to be in default; that unless they are staring a loss in the face, they won't be motivated to work on your modification - not true. I got my modification approved otherwise. Besides, deliberately defaulting on payments brings a host of issues starting with shooting down your credit rating. I would highly discourage it as tactic less you are genuinely in default.

This is how we do it

When I got my first rejection notice, I called it in: they said the reason I got rejected was that I had a monthly deficit on my income/expense worksheet. Coming off nearly a six-figure salary, this had been somewhat of a challenge. But, after getting some income support letters from relatives and showing savings-distributions I managed to weave it down to a $1,000 monthly deficit. Still, it surprised me that being so fresh into the fall of unemployment, they would expect such normalcy in one's financial affairs. They told me that I could rework the numbers and resubmit. But, something was off-kilter. My monthly deficit was based on my current interest rate of 5.4% and not a modified rate. In fact, if they calculated my income/expense at a rate of 3.5%, I would have easily made it into the black. When I called up the bank and locked horns with them on this, the response, more or less, was this is how we do it. I kept getting told about how they had to follow Investor Guidelines. After about twenty minutes of emotional rancor over the phone, I realized I was being stupid--I was pouring out to someone who had little understanding of what was going on and even lesser capacity to do anything. Still, I called in a couple of more times just to see if I wasn't hitting the wall with some nincompoop--but found no movement. I also asked for detail on what the Investor Guidelines were all about, but to no avail.

Presidential

Ergo, I wrote a letter to the President of the bank, copied the Chief Credit Officer, and the Director of Consumer affairs at FDIC. My contention was that under the pall of a major recession, and a comprehensive bank bailout by the government, I was being jerked around. I conveyed to the authorities that I felt someone was being insincere or attempting to sabotage my attempts at a modification. By this time I had rented out my house and moved into an apartment to stave off any eventuality where I may have to fire-sell (I was not upside down, still had a bit of equity). So, I could no longer avail the HAMP program which is for owner-occupied only. Anyway, the FDIC forwarded my complaint to the OCC (Office of the Comptroller of the Currency) who promptly informed me that they had forwarded it back out to the bank company for a response. Soon, I got a Special Forbearance Agreement from the bank President's office that halved my payment for a trial period of three months after which it will be re-evaluated and the mysterious and elusive Investor approval would still be required. It happened about three and a half months after the point at which I had applied for it and needed it.

Safety-net

Well, let's see what happens when my evaluation comes up. Despite the victory, I know I'm not out of the hole. Though I feel good about having attained something, the entire process came across as injudicious and out-of-character with a safety-net feature. There needs to be some provision for people to find their feet after a grave event such as joblessness. Anyway, I have decided to research more on this subject with the aim of framing the program and its possible shortcomings. If anyone has any valuable material or stories to share, please do send it my way. You can leave a comment or email me at amer.chaudri@email.com. Here's a couple of burning questions...

What are the aims, objectives, and guidelines governing modifications?

Are modifications sponsored by the government? Or borne by banks/investors?

What are Investor Guidelines for modifications? Is there a potential conflict of Interest here

Driving in Inclement Weather

Everybody loves a good snow day – when Mother Nature dumps enough snow on us that school and work are cancelled and we can all just stay home and watch movies and drink hot chocolate. Sometimes, however, it becomes necessary to drive in the snow and ice. If it does, it is vitally important to know what to do in these situations.

Before winter even started, hopefully you had the chance to check out your car to make sure that the tires were properly inflated, the antifreeze levels were in the right place, and that the rest of your car is in proper working order. Additionally, you should have an emergency kit in your car in the event you’re not able to drive in the bad weather.

Provided your car is in good shape, you have your emergency kit, and you know the following tips to driving in snow and ice, proceed with caution and get there safe.

Drive slowly. Not only is it possible for your car to slide on the ice or snow, it is also possible for others to slip and slide. Additionally, visibility can be low, so it might be hard to see cars that are stopping ahead of you. Leave plenty of space between your car and other cars so that you have plenty of reaction space. If you generally keep a car’s length between you and other cars, keep three car lengths when it is snowy or icy outside.

When you have to brake, do it gently. You may skid. If you do, back off the brake. If your wheels do skid, remove your foot from the accelerator immediately and steer into the swerve. Meaning, steer the front wheels in the direction you want them to go, or the opposite direction that the rear wheels are skidding. If you start skidding the other way, correct again until you’re back on track.

A note about brakes. If you have anti-lock brakes, DO NOT pump them. Many driving manuals will tell you that when your rear wheels skid you should pump your brakes, but those manuals were written prior to discoveries about anti-lock brakes, so don’t do it. Instead, apply gentle and steady pressure. If you have standard brakes, pump them gently to slow down your vehicle.

Even if you don’t skid, there are plenty of dangers on the road. Make sure you keep your lights on no matter what time of day it is, and keep your windshield clean to increase visibility. Don’t try to pass other cars, especially tractor trailers, snow plows, and sand trucks. These vehicles have low visibility and have trouble stopping.

Use low gears, and be super careful on bridges or overpasses which are more prone to freezing. These are the most dangerous areas in the winter, even if the outside temperature is above freezing.

Make sure not to spin your wheels should you get stuck in deeper snow, or you’ll dig yourself in deeper. Use sand or kitty litter to try to give your tires some traction, and try rocking the car (as long as your owner’s manual says it is OK) to get it out.