Loan Modification Misinformation

Earlier this week I did a conference call with Carrington Mortgage and someone who wanted to keep their house. I suggested we do the 3-way call because he said that Carrington told him he doesn’t qualify for a modification and the reason they gave him I didn’t think passed the smell test.

Apparently, they had approved him for a trial mod and then did a title search and subsequently withdrew the offer because they claimed the title was clouded. This can be a legitimate reason to reject a modification but I did not think it applied to his case. The clouded title was a result of a homeowner’s association lien of which he had entered into a payment plan. He told me that he explained to the rep at Carrington that he had a payment plan but was told that didn’t matter and he had no other options.

After learning this, he contacted me to short sell, I talked with him and found that he was ready to sell the property but his wife would have preferred to keep it. Upon learning this, I suggested we do a 3-way call with his lender. As a professional who has been dealing exclusively with short sales and loss mitigation departments for more than a decade, I am able to know when to call BS and when we are being told something that is legitimate. There are reps in the loss mitigation department who know what they are doing and others who do not, yet pretend that they do.

We called and talked with a few people at Carrington until I was able to identify that we had reached someone who was knowledgeable about Carrington’s policy regarding a loan mod with clouded title. Previous to our call, he had been told he had no options. In truth, he had three options.

Option #1 is that he presents the evidence of the HOA payment history to Carrington; the first rep had told him he could not do that. She was wrong. The person we were talking to was right. However, Carrington can still reject the payment plan if for example he just started it or if they felt the balance was too high. His HOA dues were around $300/quarter and he owed them $2,300 with attorney fees, etc. which is within reason that they could approve but they might still reject it.

Option #2 is that he contacts the HOA and explains his modification dilemma to them and request that they sign a subordination agreement which would allow the modification to be recorded ahead of the HOA lien, but it is also possible that the HOA could reject this.

This brings me to the third option and final option which is to just pay off the $2,300 and have the lien satisfied.

The first rep at Carrington should have explained these options, but they failed to do so and most real estate brokers who do short sales would not have told him that he still might be able to be approved for a modification. Fortunately for him, he ran into one who had his best interest at heart.