I have run into 2 situations for what the market is going through. It seems there is no set protocol for the bank procedures with the loan modifications and it is very confusing to all the home owners in crisis.
Home owners are worried about their homes and call the banks to do a loan modifications. The owners let the bank know they are having problems and do not want to be late on their mortgage. The banks tell them there is nothing that can be done since they are current on the mortgage.
When the home owner is late on the mortgage the bank will then do the loan mod with no guarantee. After the owner has sent in all the paper work many owners have the confidence that they will now get the help needed. (False security) Many circumstances the bank has filled a nod but the owners think they will be ok with the loan mod.
If the home has an auction date, the auction will be put off pending the loan mod outcome. What the owners are not aware of it the fact that if the loan mod is declined by the bank the auction date becomes active in full force. ( The home goes to Auction right away with no time for the short sale) The owner may not be aware of the auction it since the notification was sent months prior. The bank is not required to send a updated auction date.
1 owner was sent a notice from Chase that the home would go to auction on 8/23/2010 and the loan modification papers were to be sent to the bank on 8/31/2010. The owner did call the bank and said that the back mortgages and fees could be paid with a 401K totaling $213,000.00. The owner was told that if she sent the money it would be returned. The home did go to auctioneven though the loan modification papers were sent in. This owner was also sent eviction papers to respond to the court within 5 days. The owner went to court in a panic filled out the required paper work and the eviction was dismissed. The owner was offered cash for keys in the end.
2nd owner was declined a loan mod with Wells Fargo-Wachovia and the home is going to auction today. There was no time for the short sale
So with the banks procedure at this time and until a better system is put into place, the owners of home in trouble may want to consider putting the home on a short sale with the statement ( subject to loan modification approval)
By Margie Millar Realtor®
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