Help for Homeowners

          President Obama recently announced his plan to help homeowners stay in their homes either by refinancing or modifying existing mortgage debt. Although complete details will not be released by the Administration until March 4, 2009, there are three basic components addressed by the plan.  The first are refinance options for those who are current in their payments but have very high interest rates and low to negative equity in their homes due to falling market values. Second is loan modification opportunities for those who are in default by lowering the interest rate and in some cases reducing the principal balance, thereby reducing monthly payments. The third works to make mortgage-financing dollars less expensive and more available in general.

          Lenders are not required by law to work with borrowers. The idea of the plan is to offer financial incentives to the lenders either by direct payments from the government to lenders or by a government guarantee of a portion of mortgage debt after loans are renegotiated and modified. Since the details of the plan will not be available until early March, it’s a pretty safe bet that lenders who have been working with borrowers over the past several months will hold off on finalizing any loan modifications or refinances until they know what the specific incentives will be.

          In the meantime, for those homeowners who have been talking to their lenders with the goal of modifying their loan or refinancing entirely, it makes sense to continue the conversation.  These conversations in most cases require extreme patience since your follow-up calls are almost always met with the need to completely rehash the entire chronology of past dealings with the prior lender’s representative since their records fail to show evidence of the process.

          Here are some tips for creating a written record in order to document your efforts.

1)       Always ask for and write down the full name and company ID number of the representative with whom you are speaking. Last names are generally not disclosed, but ask anyway;

2)       Always ask for and write down the name of the department and the direct telephone number for the department. Also, ask for a mailing address and a fax number for the individual and the department so that you can follow up the conversation with a confirmatory letter that you send by mail and fax.

          For example, you have been told that the lender will be modifying your loan by lowering the interest rate to a certain percentage and that they will be “sending out the paperwork in 5 to 10 days.” Rather than waiting for the paperwork to arrive (and it usually does not) before communicating with the lender, send a letter by certified mail or fax to confirm your understanding of the conversation and deal. Alternatively, if you have been asked to send or fax paperwork such as bank statements or paystubs, always accompany the information provided with a cover letter that confirms your understanding of the deal.  If no deal has yet been made then, at a minimum, restate where you are in the process, including a description of your understanding of what the next step or steps in the process will be.

Beth H. Davis is a director at Hamblett & Kerrigan, P.A.   Her present practice focuses on real estate and business transactions. You can reach Attorney Davis by e-mail at bdavis@nashualaw.com.

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