Forbearance agreement don't work! Loan modification alternative!
A forbearance agreement is an option that is being used by many homeowners these days in order to avoid foreclosure and bankruptcy. And while a forbearance agreement may not affect your credit score and may help some solve their problems, people should be aware of the pitfalls involved.
One of the biggest problems that people have with forbearance agreements is that many homes lack the equity needed to get a bank to accept such an agreement. In order for the bank to feel comfortable tacking on interest and missed payments on the back end of the loan, the lender wants to see that the home has sufficient equity to support the extra costs.
With a forbearance agreement, the lender agrees to let the missed paymets accrue until the baloon is due, but, if the mortgage trumps the homes value, or is close to it, the lender will not be willing to allow a forbearance agreement to take place.
Another issue with forbearance agreements is the fact that even homeowners with equity may still not be able to handle the penalties and interest that will be due in 1 or 2 years when they have to pay the back payments in full. The homeowner will have to immediately begin to make payments with a forbearance agreement and not miss any more payments in the future, if they due they will be right back in foreclosure, and end up losing their home. Now, why would you, as a homeowner, want to be put in a situation where you end up experiencing a bad case of deja vu? If you got behind in payments once, what makes you think it won't happen again? You have to look at your situation and decide on whether or not it is financially smart to put yourself in a situation where you are going in circles. The economy is bad, and it is a fact that people owe way too much on their homesk, and they need to work out an agreement with their lender where they don't end up being stretched to the limit paying thier mortgage.
The alternative to a forbearance agreement is doing what is called a Loan Modification. A loan modification is an agreement where the lender agrees to reduce to the borrowers interest rates to an amount reflective of their income, and if you know how to present your case to your lender, you, as the homeowner, can get a mortgage principle reduction. But as just mentioned, you have to know what you are doing!!
You can't just call up the lender and say, "hi mr. lender, i cant afford my mortgage anymore, give me a 3 point reduction on my interest rate!', the lender will literally hang up the phone on you! You have to know what to say and how to package your information in way that will make the bank take you serious. After all, it is not your fault that the market crashed, and you deserve a chance at success. Learn all you can about loan modifications and save your home from foreclosure!! Visit us today at http://www.homebuyerforcash.com
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I did a forrbearance modification with wells fargo. Before I was never behind on my mortgage monthly payments. A wells fargo represenative presented to me that i will not have to pay my mortgage for 6months and the cost would be added on to the end of my mortgage. Now the 6months is up and their telling me i have to pay $16,000 or I will lose my home
Beth -
I have heard this alot, especially with the trial modifications.
I have some great contacts at Wells - If you want to send me your detailed situation, I can forward this to them. In many situations, I have been able to assist my clients in getting resolution vs not knowing what is going on.
Let me know if I can help.
BOB, MBA, CDPE, ePRO
bob@inspiragroup.com
I have the same situation with First Horizon i never missed a payment and was put on a loan forbearance for 6 months ended dec 1st 2009 they wanted a ballon payment or to resumit my finantials to see if i qualify for a loan modification. I tried to resumit during the forbearance and they made me wait till it was over so they have just stared on dec 16th2009 my new application and i have heard nothing, Meanwhile now they say i am 6mo behind in payments and they will not except any payment except all in full. I started with not even 1 late payment and now i am in fear of forclosure. I dont know what to do. Everytime i call they say hold onto your funds. I wish they would take a look at my finantials meanwhile they are charging interest on the money everymont there is no payment??? Ocean
Ocean:
My situation is IDENTICAL to yours - same lender and all. Today I have tried to get through to them, and their phone line is busy. You always get difference people who really don't know what the last person told you. I was (verbally) advised I would definetly get modified because I made all of my payments on the forbearance agreement on time. I have the persons name that I talked to, and the date, but that is not doing me any good. I would advise someone not to get a forbearance agreement, unless they will definetly have the funds for the missed payments after the term.
It is really important to read all of the terms before you sign a forbearance agreement. I am a little confused as to why they had you sign a forbearance agreement when you were seeking a modification? You may want to talk to a HUD Approved Counselor about your file (you can find one in your area by going to www.makinghomeaffordable.gov) or consult with an attorney.
i also have a similar issue. I am suppose to be represented by
my "attorney".i filed a loan mod program since Nov. and was advised by some people not to pay my monthly mortgage (eventho i could have) if i was in a loanmod prog.I was informed by the processor that i was approved for the "trial mod" just this April. she even quoted me the figures of the scheduled pymts.and where to mail it toand i should start paying them this coming May 1. she also mentioned that i will be expecting a packet from Chase. I rcvd, a packet from Chase via Fedex, but to my surprise it was a Forebearance agreement w/c also gave me a diff quote of scheduled pymts.I called her & told her what i got. Now she told me that she will forward and mention it to my lawyer and not to fill out and submit the form since it is not the one that they have negotiated. now i am confused why I wassent this kind of form, and it is scarry because they are saying that they will eventually foreclose the property if i dont make this pymts. now, i am thinking of firing my lawyer because it took them so long to give me a result and they dont seem to follow up w/ my status. i am running out of time, please help me. i dont want to loose my home. thank you.
You have hired the attorney to represent you and unless you feel that they are not doing their job then let them negotiate on your behalf. You can always talk to your lender to confirm what the attorney is telling you. You are doing the right thing in reading all of the documents and making sure you understand exactly what is happening. It is very important to stay involved in the process and completely understand anything that you sign.
I am behind 2 payments with Bank of America. We have a FHA loan, which was thru Taylor,bean,whittaker but BOA took some of their loans over since Taylor was taken over by the FEDS. I have requested a modification and was told by BOA home retention team that the negotiator did put a workout plan in the system to pay $1883.79 a month starting May 2010, but then that workout was cancelled stating "disregard trial period more information later. I need to know what to do now. Should I get in touch with the CEO to see if they can do something about this? The negotiator received our paperwork May 2010 and we were told it take 30 days.
Thank You
The only thing you can do is to continue to follow up with them. Document all of your conversations. If you feel that you are not getting any answers you can ask for a supervisor. The process does take time.
After a pre-trial period of 4 months and bankruptcy, had to start over with the process, I started with WAMU. Second approval was a government modification, BUT quality assurance wouldn't approve it, assuming this is investor. Back to the drawing table. Keep in mind the difference between the two was $1000. Called Chase Friday, I faxed them a letter/complaint I was finished with them ready to walk. Now they are doing a forebearance starting in September for 6 months for the amount close to the first modification. My house is about $50,000 negative equity, am I going to get swindled here with the forebearance? Why would Chase do a forebearance and not a loan modification? Do I need to hire an attorney, should I do an audit? Would the first loan with WAMU make any difference? Need help?!
Hi Karyn,
You will want to make sure that you read the terms of the forbearance agreement carefully. Pay close attention to the repayment of any past due interest. You will also want to carefully read the delinquency clause. In the past we have heard that if you are late on a payment (outside the grace period) that they can proceed immediately with the foreclosure by issuing a Notice of Trustee Sale (provided that the Notice of Default had been filed at some point in the past). You may want to seek legal advice once you received the agreement to make sure that you completely understand the terms prior to signing.
My lender is Suntrust. I just got forbearance agreement from them yesterday. Should i sign it?
I am current with my loan at this point. No late payment ever.
my monthly payment right now is 1277, but the forbearance agreement is 1550 for 4months start Sep 1st to Dec 1st. Because the payment is higher, so i call them to ask what is going on, they said the payment is including my Tax and Insurance(since i am under MOD process, they have to take over my property tax and insurance). Is this normal? should i sign it? the agrement only has same plan payment for 4 month, it didnt say anything about what happend after that, or if i should pay a ballon payment or not... So i am so confuse... any help /re is good..
Also, if i do sign the forbearance agreement, will it hurt my credit?? since i always current w/ my payment, so i dont want to do this and hurt my credit...
THX in advance...
Hi Scott,
Are they only adjusting your payment for 4 months? Are they changing any of the terms of the loan like the interest rate? Can you be more clear on what the benefit is to you as outlined in this agreement? If it is only for 4 months and does not benefit you do not sign it.
That is why i am confuse about.. Cuz they didnt detail what is going on. To my understaning, the 4 payment is base on regular loan payment and my tax n insurance. On the agreement(one paper only) has nothing regard why it $1512, what dose pln paymnt include, what is the rate or term. As I mention, i call them to find out why is the amout, Even the Mitigation customer service said usually it should detail how it calculate the plan, but they did said that after the trial payment, the MOD term and paper work MAY then finalized. So you think i shouldnt sign it? becasue there is no term invole? or ?? Thanks again for your response..
If is okay w/ you... can i send the copy to you.. so u can check it out?
Hi Scott,
Do you have an experienced real estate professional, attorney or financial advisor you can contact to have them review the document and your complete file? If you do not you may want to see if you can find a HUD approved counselor in your area that you can show this and all of your other documents to (including the pending modification paperwork). You can find a FREE HUD approved counsellor by going to makinghomeaffordable.gov.
It is not just this document that needs to be reviewed, you would need someone to look at all of your paperwork to get a clear picture.
I am not an attorney so I could not provide you with the advice that you need.
thx!!!!
Don't sign it. I was in the May flood in Nashville and had to relocate and continue paying my mortgage plus rent. After 3 months Suntrust sent me a Forebearance agreement for July - October. I just moved home and recieved a foreclosure letter stating I was 2 months behind. Before I signed the agreement I called and they advised me this would not affect me this is just to help me and I would not have to pay this back, it would be placed at the end of my loan. I have never been late before and the only reason I was, is because of the flood and the forebearance Suntrust offered. I just got off the phone with them and said I am 2 months behind and still owe the money from the forebearance agreement. She said they allowed me to go 3 months without making a payment, but I still have to remain current. (How does that make sense?) Then she said it does affect my credit by show deliquent in payments. So there is no reason to even have a forebearance agreement and they can still forclose on my home which I just returned too! There are a lot of horror stories I have been reading about Suntrust. Through my experience with them, they have been the worst morgtate company ever, not just now but from the beginning. Don't trust anything they say.
I have applied for a mod in july with my lender LBPS. I have never been late on any payments and have great credit. They said I didn't qualify for making home affordable but offered me a 4 month forberance that would possibly lead to a permenat mod. I do not want to do the forberance because it will show up as me paying my mortage late, they say I have to do it to prove I can make the reduced payment...... this is confusing to me because I have proven that I can make the full payment over the last 5 years. They say do it or no help... what should I do? Do you have to do a forberance program to qualifie for a mod?
Hi Jenel,
Make sure you read the terms of the forbearance agreement carefully. Based on what we have heard from homeowners the lender may still foreclose even though you have made the payments under the terms of the forbearance agreement.
Each lender will be different in terms of their modification processes. They are under no "obligation" to offer a modification and if they are telling you that this is a requirement then you have to consider whether or not you are willing to agree to these terms. Based on what you have said it sounds like they "may" be willing to modify your loan after 4 months.
You may want to check with them to see how they will report the forbearance agreement to the credit bureaus. They may not show this as a mortgage late if you are making payments.
I cannot stress enough that you need to make sure you read and understand the agreement before you sign it!!!
I am in the same position as Jenel. I have the same lender LBPS and have never been late on a payment. I tried to refi through other companies but was declined due to having a 50 DTI. I am in in a 5 year ARM and it will reset soon...I didn't qualify for the making home affordable since it was my primary residence. The lender LBPS said they had an alternate program and I would have to make 4 reduced payments and then they would do a modification...All I would have to do is show I have my current job still(show paystub). After speaking to numerous employees at LBPS they said they would not reduce the principle but would lower my payment and change my interest rate down to 2ish percent. The servicing company LBPS also said they would extend the terms of the loan to 40 years so I would be able to make the payment. I am at the end of the forebearance agreement making 4 payments of $875...My original payment was $1,838. So, I am at the point where I just called LBPS in Oregon and the guy I spoke to said I was assigned another lady in the modification department to handle my loan. He said he sent an email stating I finished my payment and was ready for a modification. I asked to speak to the lady who was assigned and he said she is probably working on a loan modification right now..Also said I she works on 300 mods a day etc...I said for her to call me as soon as possible. Has anyone been to this stage and received a permanent modification? If so what were the terms? Jenel..I signed it because I didn't have any other choice..I would loose the home..I had perfect credit as well..I will let you know what happens!!
Hi Ty,
Please keep us posted! Make sure that you read everything before you sign it. Also, do you happen to know if this period of reduced payment has affected your credit score? We often get asked if signing this agreement will be reported negatively by the bank and have yet to hear a bank guarantee that it would not affect your credit.
Thanks for sharing your story. It always helps to hear from folks that are working through similar situations.
Ty and Jenel,
Guys, please contact me at dcmetrokalel@gmail.com.
I am in the same situation as Jenel. My loan was just switched to LBPS. I submitted the paperwork for the Loan Modification. When I called them, they told me that since I haven't been late on any payments that I don't qualify for the Loan Modification, but I have to do a Forbearance first. They said that after the 4 months I will be considered for a Loan Mod. My biggest thing is having my credit look bad. The guy said this was my only option, and I need some relieve. But I don't want 4 months of saying I was not paying my loan. I will need to buy 2 new cars in the next calendar year and I am hoping to buy another home before 7 years go by, which is how long things stay on your credit.
I am frustrated, confused, and just plain discouraged. I already wasted $1500 on a third party company that was supposed to be helping me through this process, and I just gave up on them and started doing it myself. Please advise! I don't want bad credit!
I'm in the same situation as you WIth LBPS and I would love to chat with you to see if it will be OK to me to sign or not. Please send me an email. Best.
I am in the same situation, LBPS didnt approve my making home affordable, they said i dont qualify and i was declined for forbearance trial period because i am not 60 days pass due.. no help from them at all...
I am in the same situation, LBPS didnt approve my making home affordable, they said i dont qualify and i was declined for forbearance trial period because i am not 60 days pass due.. no help from them at all...
Does anyone have any information on LBPS, and their short sales process and turn around time.
Ty,
What happened? I am in exactly the same situation as you but only two months into the four month Forbearance Agreement. Do you, or anyone, know what happens after the four month agreement comes to an end?
David
I have been trying to work on a mod with LPBS since May. We had been working on one with our previous lender until it got transferred to them. We finally got a forbearance agreement in August, in which we were to make 3 "trial" payments. We made the 3 payments. I didn't hear anything from them so I called them. They asked me to send them current check stubs to prove that nothing had changed. That was November 20. We are still waiting for them to finish the modification paperwork. I talked to them again tonight, and was finally able to get a payment amount from them, but now they want me to fax in bank statements...AGAIN. It is never ending with them! I sit on hold for an hour every time I call, just to have them tell me to call back again next week.
We are debating if we want to continue with the modification, or try and do a short sale and go rent a house in the country that we really love. With all the bad stuff I read about LBPS, I am a little nervous about turning down the rental property and counting on them. So far, they seem to be working with us...although in a VERY frustrating way, but I'm just not sure what's going to happen in the end with them.
So, David, that is what has happened so far after our forbearance agreement ended...but we were originally very behind on our mortgage.
i been on forberance agreement with balon payment and i been told that once i make 3 trial payment to send in update information and thay will work on permanent loan mod. which they will work on for ballon payment and i did that after 3 monts i call and submit all require information and thay told me is in reviev proces and shud keep make regular paymnet so that they wont forclose hause just today when i call in they told me i am in active for closure and that i was informed wrong abaut ballun that i shud make it ballun payment thay told me that i have to call back in 24 hours so that they can rewiue for onothe r solution please help...i was doing the whole thing what they told me to do...
I have the same lender LBPS. I have not missed a payment and they said I do not qualify for making home affordable (I'm still not sure why). They sent me a forbearance agreement instead that is for a duration of 4 months starting in Feb.-May .I was told that they would then evaluate my financial situation to see if I qualify for a mod at that time. I have the same concerns about my credit score being affected. They assured me that it will show as the account being on hold and will not show as a late. I was also informed that at the end of the agreement I will owe a balloon payment if not modified. I was told there are no late fees added just the remainder of what I did not pay over the 4 months. They said they may extend the agreement longer while they are evaluating me for an in house modification. Does anyone if this is true about the credit reporting because it seems like I'm taking a big risk with no guarantee.
I am currently renting a house ffrom my brother in law. we have gotten forclosure letters and when we confronted him he assured us that it was just a "generated" letter and that everyone was fine because he is under forbearance. and that we HAVE to send the bank a money order and not a personal check because the forbearrance requires him to not move out of the house and..... am i being screwed over?
Hi Megan,
He could have a forbearance agreement but the property could still be in foreclosure. It is likely that he is telling you the truth. The reality is that if he breaches any of the terms of the forbearance agreement the lender is likely to continue with the foreclosure. You may want to contact a local realtor that specializes in foreclosures to check the current foreclosure status. If the property only has a Notice of Default filed then it would be necessary for them to post a Notice of Trustee Sale before scheduling a sale date. This means you would be given some notice if the property was going to sale.
In my experience when there is a forbearance agreement it is necessary to make the payments each month on time. A failure to make a payment (or even a late pay) could trigger the escalation of the foreclosure to a trustee sale.
LBPS is my mortgage lender and I recently signed a forbearance agreement. My major problem is that they reported to Equifax I am under a partial payment forbearance agreement but reported to Experian that I am 30 days late and am $235 past due (the difference of the former payment amounts and the reduced payments). I was told by the person who processed the forbearance agreement they would only report that I was making partial payments, not that I was past due or late. When I saw my Experian report and contacted him again, he changed his story this time and said they reported me late because I didnt make a payment in Dec. 2010 and the forbearance didnt start until Jan 2011. The messes up thing is that THEY told me NOT to make a payment in Dec. I can't understand why they would tell me not to make a payment one month and then report me as late. Has anyone who finished their forbearance agreement with LBPS tell me how they reported to their credit agencies?
hello. my husband and i are thinking over doing the mod with lbps. we are going to have a $700 car maintenance so thinking we have no choice but to accept the forbearance agreement. they did say we would be reported as late during the trial. but if i dont accept, there will be no help available to use, period. they did say their in home mod would work to adjust our apr so that our mortgage to income ratio is around 24%. Right now were at 27%. I have have had a pay increase and my husband is expecting one. Talking to one of the guys at lbps, that would drop our ratio to 26%. I tried this process with them in aug 2010 and they never did anything with it. I have little trust in them honestly, but we need help. has anyone yet recv'ed a perm. mod with them? tamar, hope this helped at least a little.
We had a trial perdiod through Wells and made the 3 payments on time. Then the final mod paperwork came in the mail for our signature and the mnthly payment amount was higher than the trial. The rep said that even though we signed the mod paperwork, since we hadn't made payments toward it yet, we could apply for a new mod in hopes of lower payments. So we did, and got investor approval for new mod with lower payments. But now Wells is saying that since we signed the previous mod, we were required to make 3 payments under it to be eligible for a new mod. Now one year has passed since the paperwork was signed and Wells is saying we can't move forward with the new mod approved by investors and that they're going to foreclose. Any advice?
Hi Joan,
I would nicely try to reach out to a supervisor. The story is very confusing since you did make your trial mod payments and didn't sign the final modification.
First check to see where you are in the foreclosure process. Have they filed a Notice of Default or set a sale date? This is critical because they could foreclose on the property even with a pending modification in process. If you cannot get this resolved and need additional help you may want to reach out to a FREE HUD approved counsellor by going to makinghomeaffordable.gov or reach out to an attorney.
The bottom line is, do not take the threat of foreclosure lightly. Some folks just think that things will work out and then the property goes to trustee sale. Once it goes to sale it is tough to have a sale rescinded.
Our home loan is through Wells Fargo and since July 2010 i began the process of a loan modification. For several months i faxed them copies of check stubs, hardship letter, tax forms and so on. Finally about 3 months ago they sent a forbearance agreement with the 4th payment of $16,000. I was so afraid of signing this form because to begin with we were having trouble meeting our monthly payment of $1400. But i felt i had no choice and this would buy us time. Plus i spoke to one of the customer service reps and told them that i didn't have $16,000 for the final payment and he said all i had to do was as soon as i made that 3rd payment to send in a letter stating why i couldn't make that balloon payment. So i figured the loan modification process would start again. Well, i was unable to make my third payment because we live week to week with no savings and my husband is still not working the hours he used to plus he was out of work for 2 weeks for surgery. So now i missed the 3rd payment and im afraid to call the bank to find out what's going to happen now. Is this the end of the road for us?
Hi Minnie,
In most forbearance agreements a failure to make one of the payments would allow the bank to move forward with the foreclosure process. I am reluctant to say it is the "end of the road" because you just never know. You may want to reach out to your lender again or contact a HUD approved counselor at makinghomeaffordable.gov if you feel that there will be a change in your situation that would cause you to be able to make the payments. If this is going to continue to be a struggle maybe it is time to really take stock in your situation and make a strategic decision. I can tell you that many people I have talked to that have finally succumbed to their situation (moved into a rental that they can afford and started the rebuilding process) all say the same thing, they wish they hadn't wasted so much time fighting. I know for sure that this process has been stressful on you in ways that you may not even realize. You and your husband sound like hard workers and you deserve to live a life without all of this worry and hardship. Sometimes the real strength is in letting go and moving on. One thing for sure is that there is a lot of life to live and it is not necessarily tied to a piece of real estate. It sounds like you have fought a good fight, and maybe you have some fight left, but it may just be time to claim victory and move on to the next chapter of your life!! We wish you luck and hope that you will let us know how things work out.
Hey...has anyone hit the end of their "arm" w/LBPS??? I am wondering what they are going to do, will they raise the interest rate significantly on us?
I have my mortgage through Wells Fargo. I've received forebearance papers with a 3 month trial. The day after i received
those papers I received a defaut judgment from the court stating I did
not give them an answer when I received the summons when in fact
I e-mailed their lawyer and told him I was applying for a loan modification (which I have done). Anyway I called WF yesterday and they told me that even after the 3 month trial (which starts in June) that they can still foreclose on me. I still haven't heard anything about my modification and every time I try to call my caseworker I always get his voice mail and no return call. My question is if after the trial period they still decide to foreclose why send them money I might need if I lose my home anyway and since there's already a default judgement against me will I at least be protected for the 3 month trial period while I'm waiting on the result of the loan modification? Wells Fargo are tough people and so far the ones I've
talked to seem heartless.
If I decide do not to sign the Forbearance Agreement if increases my chance to get the loan mod?
STOP! Do not sign a forbearance agreement.
What a forbearance agreement does is agree to terms of paying the same monthly payment or more. The money you are paying does not go to teh loan or towards teh home, the money is going into a government backed high interest savings account. Yes a high yielded savings account. Also, teh money is is also paying into the investors deep pockets.
Please email me for any home modification assistance servicing
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