Free help available for home loan modifications

MOSES LAKE — If you don’t want to go it alone when applying for a lower mortgage payment, free help is available.

The application process for a home loan modification is lengthy and often takes many phone calls.

“We do those calls on a client’s behalf,” said Karin Smith, a housing and credit counselor with Appraisen Financial Advocates in Moses Lake.

Although using a counselor isn’t necessarily faster than doing it yourself, the company does know “the tricks of the trade” because they’ve done it before, she said.

She received additional training two years ago at the Washington State Housing Finance Commission, concerning home loan modifications.

It also helps when a homeowner is proactive, gets involved and assists Smith by finding the required paperwork.

She first asks a client if they want to keep their home.

If so, Smith calls the lender in her client’s presence to ask if the modification is possible.

If the process proceeds, clients receive a loan modification packet to complete.

They usually have a month to finish the paperwork and must write a hardship letter explaining why they are having difficulty with their current payments.

Lenders do not want to hear home-related financial problems, such as financial difficulties happened after a hot-water heater exploded, she says.

They figure you should be able to handle those responsibilities as a homeowner.

Applicants must also prove their income, submit a copy of a current utility bill in the name and home listed in your application and a signed copy of their tax return.

“This is where a lot of people get their loan modification hung up,” Smith says. “We never sign the (tax returns) we keep on file.”

Smith talks to clients about balancing their household budgets.

Sometimes debts can be consolidated at a lower payment, freeing up more money for their mortgage.

Other suggestions include bringing in a renter, asking for overtime or working a second job.

She says people who were open with her about their finances were later able to make their new loan work.

“It’s not something we judge on,” Smith says.

Situations change too. One of Smith’s clients initially wanted a home loan modification after her husband left her.

After thinking her situation over, she discovered she didn’t want to stay in the area or keep her home.

The woman decided she wanted to be closer to her family living many states away.

Smith found that just because a home is going into foreclosure doesn’t mean one loses their home.

She’s seen foreclosures take between 60 and 200 days to complete, buying a homeowner more time.

“It’s a risk sometimes and nerve-wracking on the homeowner’s part,” she says.

Situations vary. She worked with a Cle Elum couple who thought they had a loan modification plan in place, but still received a notice the home was being sold.

“It took us almost three and a half weeks to straighten this out,” Smith noted.

On the other hand, a Yakima couple learned their application was approved just two days before their home’s sale.

“Basically, it’s persistence, like John Doe said, and a waiting game,” she says. “Sometimes we apply for home loans that we had to reapply and reapply and reapply (for).”

John Doe is a pseudonym used in a Columbia Basin Herald article printed May 5, titled “Home loan modification helps couple.”

Doe spoke of his experience contacting various loan centers worldwide.

Smith agreed, saying many lenders use overseas call centers to keep costs down.

“The majority of calls I do end up in India,” she noted.

In the last few years, she’s seen an increase in customers seeking home loan modifications.

Some people want to complete the foreclosure.

“They’ve been fighting it on their own and they’re tired,” she said.

But she’s also able to provide options for those wanting to proceed.

One option is a deed in lieu of foreclosure, in which the title is conveyed to the lender in exchange for discharge of the delinquent debt.

This option is easier on your credit report than a foreclosure and eviction, which she called “a double whammy.”

Another option is a forbearance, in which payments are reduced for a certain period of time for later repayment.

This could work for a homeowner expecting a big bonus at work at the end of the year.

Another option, refinancing, is “iffy,” she says. In many instances, “you pay a lot more,” she added.

A reverse equity mortgage can be an option a couple in which the youngest spouse is age 62 and the home is of a certain value.

The reverse mortgage gives the lendee money on a monthly basis.

For more information, contact Appraisen Financial Advocates at 509-765-6599 or the U.S. Housing and Urban Development (HUD) help line at 1-888-995-HOPE.

Appraisen’s Moses Lake office is located at 821 W. Broadway Ave.

Another free option in Moses Lake is the HUD-certified housing agency The Prosperity Center, which can assist with home loan modifications.

The Prosperity Center is a division of OIC Center of Washington, located at 309 E. Fifth Ave. and can be reached by calling 509-766-4152.

If you’re experiencing problems with a lender during the application process, contact the state Housing Financing Commission at 1-800-372-8303.