Loan Mod Still Not Done? Get Your Paperwork In!

(Editor's Note: Successfully navigating through the loan modification approval process is lengthy and requires that all documentation is correctly submitted. An incorrect submission will only lead to delays and possibly denial. Do it right from the beginning.)

According to the Associated Press, as of the end of November only 31,382 loan modifications have been made “permanent” out of 759,058. While November’s number is still drastically low – it’s about three times higher than October’s.

Why is this the case? One reason is painfully obvious – the lenders are so disorganized, that borrowers and their advocates have to submit mod applications at least three to four times before lenders acknowledge they actually received the financials of the struggling homeowner.

But the blame cannot be pinned solely on the mortgage companies. Numerous sources are reporting that a significant majority of borrowers (particularly those who attempt their modifications without professional representation) aren’t obtaining permanent modifications because their paperwork has been either incomplete or completely non-existent.

From WhiteHouse.gov:

“The majority of homeowners in trial plans still owe their servicer paperwork. Thirty-seven percent of homeowners have submitted paperwork that is incomplete. More than twenty percent of homeowners have submitted no paperwork at all.”

From the Associated Press:

“The mortgage companies, also known as loan servicers, have had a hard time getting borrowers to complete the needed paperwork for the administration’s loan modification program. Nearly 60 percent of the 375,000 borrowers who qualify to have their loan modifications completed by year-end have either submitted incomplete paperwork or none at all.”

As stated by Phyllis Caldwell (who recently was named to lead the Treasury Department’s homeownership preservation office), “Borrowers must understand the urgency of getting their completed paperwork in so they do not miss out on the opportunity for more affordable mortgage payments.”

On December 9^th, Chase Mortgage — the nation’s third-largest servicer — announced that “only 16% [of their modifications] have been approved (or ready to be approved) for a permanent modification.” The “National Mortgage News” adds that approximately 71% of the homeowners are current on their trial mods, but many have not submitted the required documents for underwriting – pay stubs, proof of employment and tax returns.

“We are focused on helping the 51% of borrowers that are paying but need help completing documents,” said Chase executive Molly Sheehan.

The inability doesn’t end with Chase. Only about 10,000 borrowers nationwide completed the modification process as of October, according to the Associated Press. The news source says the Treasury will release November’s stats tomorrow. With perpetual, back-and-forth blame being passed between servicers and borrowers, we wonder how long the administration will let their program continue as is without making some changes.