The housing bubble, financial crisis, and deep recession have left the nation with a seemingly intractable problem: millions of homeowners who are "under water" on their mortgages. Because they owe more than their properties are worth, they're unable to sell the homes and recover equity - a path ordinarily open to people who lose jobs during a recession. And because of lax underwriting standards and dubious financial innovations such as "exploding ARMs," even some who are gainfully employed find themselves in a financial box: They can't really afford continued payments, but they also lack the escape valve that a quick sale would ordinarily offer.
One answer is a mortgage modification of the kind shepherded by the Obama administration's Home Affordable Modification Program, whose goal is to help three to four million homeowners by 2012. But HAMP, a largely voluntary program that relies heavily on lenders' cooperation (and competence), has been hampered by administrative problems since it got underway in April 2009.
ProPublica, a nonprofit news organization that has reported extensively on the home-loan crisis, recently surveyed more than 700 homeowners who have sought loan modifications, and culled their responses for kernels of advice. Some of it is metaphysical - one Florida homeowner's advice was "Pray" - but other tips tend toward the more practical (and angry) end of the spectrum: "Sell your furniture, car, dog and your soul to the devil to get your mortgage payment. The banks are liars, incompetent and not trustworthy."
The most common bit of wisdom: "Don't do it alone."
Don't be afraid to ask for help. One hundred thirty-five respondents advised struggling homeowners to hire lawyers, contact their elected representatives, alert the media and file complaints with a variety of government agencies; they also advised homeowners to rely on emotional support from friends, family and other homeowners in the same situation. As one California homeowner put it, "Find others to talk to, or you will go crazy."
One of the most recommended resources for struggling homeowners was the HOPE Hotline, at 1-888-995-HOPE. The Treasury Department-sponsored hotline, operated by the nonprofit Homeownership Preservation Foundation, helps connect callers with HUD-approved counselors who can provide struggling homeowners with information and support. Homeowners who suspect their servicer of making mistakes can escalate their case to a special HOPE Hotline team. The Hotline can also connect homeowners to local HUD-approved counselors; homeowners can access the list of counselors directly at HUD's website.
Here's the rest of the advice ProPublica gleaned from its survey:
Stay organized. Research and organization were important themes among respondents, with 125 of them advising homeowners to take notes, to do online research, and to get everything in writing during their campaign to get a loan modification. For many respondents, the process of applying for a loan modification stretched across months, involving an ever-changing parade of customer representatives that 64 percent say gave them contradictory answers at times. Respondents recommended everything from pen and paper to certified mail, phone recorders and video cameras to keep track of the process. As one New Mexico homeowner explained, "document your journey thoroughly -- you will never be able to recall or communicate all the madness you will go through."
Just keep trying. Another 48 homeowners stressed the importance of making mortgage payments by any means possible. Despite what 52 percent of respondents say they were told by their servicer, homeowners do not have to be behind on a mortgage to be eligible for a HAMP modification. By making their monthly payments, however painful, struggling homeowners can prevent themselves from descending into a spiral of debt, and perhaps avoid the loan modification process altogether. As one Massachusetts homeowner put it, "Sell your furniture, car, dog and your soul to the devil to get your mortgage payment. The banks are liars, incompetent and not trustworthy."
Others offered optimism to those searching for loan modifications, asking struggling homeowners to not give up the fight. Ninety respondents told homeowners that they had to "be relentless," to "persevere" and to "just keep trying." Many who stuck with the program remarked that it eventually paid off, with one homeowner saving over $25,000 after treating the application process like "a part-time job." While most described the struggle as heroic, at least one respondent put her advice bluntly: "It sucks, but stick with it."
Still others gave homeowners common-sense advice, ranging from tips on how to getting a consistent story from your servicer (by building a relationship with one or two representatives you can reach directly) to how to improve your application's viability (by watching your spending and not using your ATM card for eating out). One Maryland homeowner spoke for a handful of respondents in stressing the importance of being polite. "Above all, don't be combative on the phone, or the entire conversation and time spent on hold will be for nothing."
But some respondents were less hopeful about the value of the program. 193 respondents advised homeowners to steer clear of the program altogether, describing it as "pointless," "humiliating," "hopeless" and "not worth the hassle." "Quit paying, save your money and find an apartment," said one Nevada homeowner, echoing a common theme of many of the more downtrodden responses. "They're going to get your house anyway they can."
To many of these homeowners, the loan mod program is at once deeply frustrating and their best shot at securing their home and financial future. They have spent months, sometimes years, navigating a bureaucratic maze set up by their servicers, all the while in the dark about the final the status of their loan modification.
For struggling homeowners looking to start the process of a loan modification, one Florida homeowner may have had the most practical advice of all: "Pray."
Click here to see the tips on ProPublica's website, along with related links.