10 things I wish I'd known before failing to modify my home loan

2009-06-30T21:08:00.000-07:00

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10 Things I Wish I Knew Before Failing to Modify My Home Loans

1. Home loan mods are about the closest thing to an old wive's tale I've heard. The only person I know (flesh and blood) to successfully modify was never late and did it through Washington Mutal...right before Chase took over.

2. You're in it for the longhaul, so decide now what you are willing to risk and lose to save your home. I realized that my life does not exist solely between these proverbial four walls. It's not my bed, my DVDs, my great-great-grandmother's antiques that get me up in the morning. I was willing to risk it all. I lost. And gained a (forced) freedom.

3. Forget the adage, "If life is a game, these are the rules." There are no rules. If any lender, media source, loan mod type or bank claims there are, well then, they change every day, so don't try to keep up. Trust your gut.

4. In order to trust your gut, seek pro bono advice from every source you can find BEFORE YOU GO LATE with a payment. Weigh it all. Ask more questions. Ask the same question again in a slightly different way (sounds kind of like a personality test, yes?) Go with what feels best for you.

5. Don't go late with your payments because your lender or a loan mod-type told you that they wouldn't consider you for modification until you are 30 days late.

6. If you go late with payments, ensure you are saving that money in the event your modification is not approved. A repayment plan is the first road they steer you down, and if you have the cash on hand, your credit and living situation will be unaffected.

7. When writing your hardship letter, know that "deficit of income" is a relative term (hence the quotation marks). Before submitting any financials or any income to expenses paperwork to your lender, find out what their quoted range of deficit is and match yours to that. It is usually a few hundred dollars less than what you previously made. You must still be able to afford both a mortgage payment and a repayment plan. I took nearly a 50% paycut and that is not a viable hardship that they consider ever able to repay what I have become behind.

8. If you are strategically planning on modifying, be creative. Rent out your place for a finite period and live with a loved one or in van down by the river. Don't pay all of your bills. Or, do none of the above and come out of the equation will a killer new Orbea Onix road bike.

9. You do not equal your credit score. I have just as many friends - if not more - and more fruitful job opportunities post-losing my home and my glorious nearly 800 credit rating (allegedly it will bounce back after 2 years).

10. You have options. Modification, short sale and deed in lieu are options that come before foreclosure and declaring bankruptcy.

This space is for you. Let me know what questions you have, what resources I can point you to and which silly anecdotes I can share to make your road to modification simpler. And remember, never purchase anything you can't pay-off within a year for $0 down and 100% interest.

My Life For Sale

10 things I wish I'd known before failing to modify my home loan