DO I HAVE TO STOP PAYING MY MORTGAGE IN ORDER TO QUALIFY FOR A LOAN MODIFICATION OR SHORT SALE?…

This question comes up again and again during consultations with clients.  And the answer is always resoundingly… NO!  You are not required to miss a mortgage payment in order to qualify for HAMP, HAFA, or any loss mitigation or short sale program.  That said, however, the regulations governing the Making Home Affordable Payment require a homeowner to prove hardship.  Hardship requires proving the homeowner’s financial inability to pay.  The homeowner must be ready to outline their current hardship and explain why they are having trouble making the mortgage payment.  Whether it is a short-term or long-term problem, the mortgage company will need to understand the reasons why there is difficulty.  Examples are medical conditions, loss of a job, curtailment of income, loss of hours, death of a spouse or family member, age of parents requiring long term care.  The list goes on and on.

If the homeowner elects to keep paying the mortgage and is able to prove hardship in their RMA or request for modification application forms, then the mortgage can review despite the homeowner being current.  Often, however, certain investor and servicers of loans, make it mandatory that the borrower not be current on their mortgage. Some even require 90 days past due delinquencies. This can be communicated to the homeowner once the application is submitted and the request made to the mortgage lender.

There are certain lenders and certain types of loans that will not even consider a short sale or loan modification if the borrower is current. So once the loss mitigation request Is denied, the homeowner can make a determination whether it wants to move forward with the request, and must at that point, in order to appeal the decision, cease payments.

While an attorney can never counsel their client to stop making the payments, we are here as a go between with the homeowner client and the lender. Knowing the rules and the lender requirements, we are here to communicate the information to the client so that they can make an informed and educated decision, whether they wish to stop making payments or not.

Often, even with a missed payment, with careful planning and quick hiring of an attorney to present the loss mitigation application to the mortgage lender, we can avoid a foreclosure all together.  Often, lenders wait many months to file a foreclosure action and by that time, a loss mitigation option is already approved, avoiding the necessity of filing a foreclosure.

Speak to attorney Jacqueline Salcines, PA to provide sound legal advice for your mortgage questions.  The first consult is always free of charge.

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