Dear Liz: We applied for a loan modification a year ago and submitted all the paperwork requested on time. Our lender claims we were denied because of missing papers. I had everything documented, so the denial was appealed, but as of now we’re still waiting to hear whether we were approved or not. What can we do? We haven’t made a payment since last March. We have the money on hand to make three trial payments, as we were originally instructed, but I’m so worried.
Answer: Unfortunately, your experience is all too common — and too often people waiting for an answer from their lender wind up losing their homes to foreclosure. Lenders’ poorly trained and poorly staffed loan modification departments have created endless nightmares for homeowners trying to avoid foreclosure.
You should immediately enlist the help of a counselor approved by the U.S. Department of Housing and Urban Development. You can get referrals from http://www.hud.gov or by calling (800) 569-4287. The advice is free or low-cost. A counselor can help assess your situation, offer alternatives and guide you through the modification process — if a modification is still an option.
You also should read attorney Stephen Elias’ excellent book “The Foreclosure Survival Guide: Keep Your House or Walk Away With Money in Your Pocket.”
What you shouldn’t do is expect the lender to do the “right” thing, including honoring any promises or commitments made to you. The people who get loan modifications have to be tenacious, persistent and savvy about the process.