We paid a third-party loan modification company almost $1,300 to help prepare the paperwork for a Home Affordable Mortgage Program replacement mortgage. We have had nothing but problems with them: They advised us not to make mortgage payments for three months, have not filled out HAMP paperwork properly and did not put down that we have a second mortgage on the property. Our lender tried numerous times to get in touch but has not heard back. What are our legal remedies to get our money back?
First of all, there is no charge to enter the HAMP. Anyone can get more information by going to MakingHomeAffordable.gov.
Next, borrowers should always make their loan payments. HAMP is for borrowers who “have a financial hardship and are either delinquent or in danger of falling behind on your mortgage payments (non-owner occupants must be delinquent in order to qualify).” However, the Home Affordable Refinance Program is arguably a better choice, and it’s only open to borrowers who are “current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.”
If you don’t make mortgage payments, you cannot qualify for a HARP refinance, and a refinance of any sort will be more difficult. Why? Those who don’t pay mortgage payments have diminished and devalued credit. This will impact not only your ability to get a home loan but also other forms of credit such as auto financing.
As to reporting the second lien, that’s important for several reasons. First, it’s a debt and must be shown on any loan application. Second, it may be possible to modify the second lien under the Second Lien Modification Program.
Lastly, the FHA, VA and private mortgage insurance companies will all try to help with foreclosure problems. For mortgage insurance companies, ask about “claim advance” or “second look” plans. These are arrangements where the mortgage insurance company works with the lender to bring a loan current or reduce the interest rate.
If you cannot get your money back from the third-party modification company, speak with your state attorney general for advice and assistance.
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