How to apply for a loan modification, by bank
U.S. Bank
To determine eligibility for Making Home Affordable or other options, call (866) 932-0462.
To talk to a counselor about delinquent payments, call (800) 365-7900.
Fifth Third Bank
Visit www.53.com and click on “Making Home Affordable”
Call (866) 601-6391
Chase Bank
Go to www.chase.com/myhome
Call (866) 550-5705
First Financial Bank
Call (877) 322-8100
Making Home Affordable
Visit www.makinghome affordable.gov
Call the Homeowner’s HOPE Hotline at (888) 995-4673
U.S. Department of Housing and Urban Development approved counseling agencies
Neighborhood Housing Services of Hamilton, Inc.: Call (513) 737-9301
LifeSpan Inc.: Call (800) 838-0117
The Robinson family was living paycheck to paycheck when in 2009 the interest rate on their mortgage went up $400 a month. When Ruth Robinson and her husband bought their house six years ago, they had an adjustable rate mortgage.
In January of last year, the bank called.
“I could never get caught up after that,” Robinson said.
She went to a foreclosure prevention workshop Thursday by Neighborhood Housing Services of Hamilton at the Middletown Public Library. Neighborhood Housing is a housing counseling agency that serves Butler County. Robinson said she hopes what she learned from the workshop can help her apply for a loan modification, but she was denied once.
Her luck could change. Don Gardner, a Neighborhood Housing foreclosure/default intervention counselor who conducted the workshop, said banks are being more friendly to customers whose loans are in default. Under a loan modification, the bank agrees to change terms of the loan to reduce monthly payments, such as adjusting interest rates and extending the length of the loan. If homeowners get a modification, the past due balance is added to the principal, then terms are adjusted.
Gardner said banks have more experience under their belts since the housing market went south. They’ve been criticized for how they handled foreclosure processes, and since 2009, under the federal Making Home Affordable Program, banks that participate must consider modification applications. Making Home Affordable is a government plan to help struggling homeowners avoid foreclosure by expanding the limits on loan amounts, for example, according to makinghomeaffordable .gov.
“The attitudes are certainly a little more cooperative from six months ago,” Gardner said.
Foreclosures in Butler County have been flat with 2,998 foreclosures in 2008, 3,158 in 2009 and 3,165 last year, said Carolyn Johnson, the county Clerk of Courts legal division office manager.
U.S. Bank, which participates in Making Home Affordable, said it has always been proactive in working with customers in financial distress. The most common causes of a missed payment are job loss, reduction of income, divorce and unexpected health care costs, said Ryan Murphy, U.S. Bank foreclosure prevention workshop coordinator.
Payments are due the first of the month and are late after the 15th. By then, the bank tries to make contact by phone and mail, Murphy said. A house is a potential foreclosure after three months.
“First of all, we want to be clear: U.S. Bank doesn’t want your house,” Murphy said.
Banks would rather keep collecting payments. Murphy said foreclosures increase the cost of doing business. A foreclosure case can take up to a year, said Lisa Clark, a U.S. Bank spokeswoman.
Jon Meade, Fifth Third Bank vice president of loss mitigation, said banks lose tens of thousands of dollars from a foreclosure. In a bank-owned repossession, the financial institution has to cover maintenance of the house, attorney fees and closing costs.
Robinson said her family has continued making payments and are two months behind. When she applied for a modification last year, she said it was rejected because their gross income was high enough to make payments. But her choices to cut expenses would have included taking her children out of school sports, which she doesn’t think is right.
In 2007, Cincinnati-based Fifth Third revised its loss-mitigation strategy to offer better concessions, Meade said. Customers perform better with deeper concessions such as lower interest rates, which leads to more long-term success, he said.
“We do loss mitigation because it’s the right thing to do, but it makes sense financially,” Meade said.
One of the biggest obstacles is getting in touch with an indebted homeowner. Someone in debt is being overwhelmed by phone calls and mail, Meade said.
“We put a lot of effort and a lot of creativity to increasing our contact rates,” Meade said.
What also drags down the loan modification process is the paperwork. Gardner says he tells clients to give lenders whatever they ask for, including pay stubs, tax returns, bank statements and a hardship letter. If one document is missing, the application is put on hold.
One of Fifth Third’s focuses this year is to improve and to reduce the time it takes to get the documentation they need.
“If they get us what we need, they should expect accurate and timely decisioning of their application. Most of the time, we don’t get everything we need,” Meade said.
Contact this reporter at (513) 705-2551 or clevingston@coxohio.com.
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