Demystifying the Mortgage Modification Process - Black Enterprise
Black Enterprise Magazine January-March 2019 Issue

mortgageWhen Teresa D. Johnson purchased a home several years ago, she was excited about becoming a homeowner and had planned to move her mother and father in with her so that they could enjoy a peaceful retirement. But last week she was seeking help with getting a mortgage modification from the Rainbow/PUSH Coalition’s annual Wall Street Economic Summit because she is in jeopardy of foreclosing.

The home was vandalized, says Johnson, a funeral director. The damage prevented her from using it as her primary residence and placed her in a position where she had to pay rent and a mortgage. She couldn’t afford the repairs and soon fell behind in her mortgage. Her loan had already been modified once, but her payments were still unbearable.

Johnson’s case is not rare. Almost 3 million people foreclosed last year, according to a report by RealtyTrac. That number would have been higher had it not been for state and federal government intervention, said James Saccacio, RealtyTrac CEO, in a statement. For example, President Obama introduced Home Affordable Modification Program to assist homeowners with reducing their monthly mortgage payments.

HAMP supplies homeowners with self-assessment tools, calculators, and free mortgage counselors to help them refinance or modify their mortgages. In addition, the HAMP Website provides a checklist of key documents homeowners will need to have ready when calling their servicer. spoke with Janis L. Mathis, vice president of the Rainbow/PUSH Coalition and the summit’s loan modification coordinator, about when you should modify your loan, why banks are not modifying loans, and resources homeowners can use to get help when your payments are delinquent. How does someone know if their mortgage needs to be modified?

Janis L. Mathis: If they are behind in payments, then obviously they know that they need help. Usually once [a home] is foreclosed there is not anything we can do. In a couple of instances we have been able to do post foreclosure relief but that is rare. The sooner you seek help the better off you are.

You should seek help if you are in arrears; if you can’t pay utilities and your mortgage in the same month; if you are paying the mortgage but you are skipping on medicine.

But it can be too early. Some of the banks won’t talk to you until you are delinquent. They say as long as you are paying you don’t have a hardship.

What types of information should homeowners bring to a loan modification counselor?

They need to have at least three pieces of information: a budget, proof of income, and a hardship letter describing what it was that made them get behind in their mortgage. Was it a death? Was it a disability? Was it a loss of a job? For most people, it wasn’t just that the payment escalated, it was that–plus something catastrophic that caused them to become delinquent.

I’ve heard that some banks will modify loans if you are spending 30% or more on housing costs. Is that true?

That is one of the guidelines that come from President Barack Obama’s Home Affordability Mortgage Program. That is another way to determine it. But most people don’t sit down and try to calculate the percentage of their gross income that their mortgage represents. Most people feel it before they can actually see it on paper.

Many people are being declined for modifications. When the bank tells a homeowner that they can not do anything more, is that really the case?

The law does not require the bank to modify the loan. We’ve been relying on some incentives for the bank to do the right thing. Rainbow/PUSH supports bankruptcy reform because it will allow a consumer to go Chapter 13 and let a judge look at it and make a decision. But the banks have kept that from happening. Rainbow/PUSH founder Rev. Jesse L. Jackson Sr. says that one bank had one million homes that were eligible for modifications but only 98 permanent modifications were made. Why are the banks unwilling to do modifications?

Banks will do modifications if it makes financial sense for them to do it. Sometimes it is because they don’t want to look bad to the community. When [Rainbow/PUSH] calls [the banks on behalf of the homeowner] about 80% of the time we get a modification done. It’s effective for those few people we are able to reach but it is not effective for homeowners in general. Is that a good reason for one person to get it and somebody else not to get it? It seems pretty arbitrary, doesn’t it?

Where else can people turn for mortgage modification assistance?

Most cities and counties have an office that provides low-cost or free housing counseling. Look for a HUD-certified counseling agency. They can contact your mortgage company on your behalf for little or no money and be an advocate for you. I would not go through this process alone.

Marcia Wade Talbert

Marcia is a multimedia content producer focusing on technology at Black Enterprise Magazine. In this capacity she writes and assigns stories to educate readers about social media; digital integration; gadgets, apps, and software for business and professional development; minority tech startups; and careers in STEM (Science, Technology, Engineering, and Mathematics). In 2012, she received two Salute to Excellence Awards from the National Association of Black Journalists and was recognized by Blacks in Technology (BiT) as one of the Top 10 Black achievers in the tech arena for 2011 at SXSW in Austin, Texas. She has spoken about technology on panels for New York Social Media Week, at The 2012 Rainbow/PUSH Wall Street Summit, as well as at Black Enterprise’s Entrepreneurs Conference and Women of Power Summit. In 2011, chose her as one of 28 People of Color Impacting the Social Web, and through crowdsourcing she was listed as one of BlackWeb2.0's/HP's 50 Most Notable African American Tastemakers in Social Media and Technology for 2010. Since taking on the role of Tech editor in September 2010, she has conceived and produced five cover stories on Technology and/or STEM and countless articles, videos, and slideshows online. Before joining as an interactive general assignment reporter in 2008, she freelanced with Black Enterprise beginning in 2003 while working as the technical editor at Prepared Foods magazine. There she further honed her writing skills and became an authority on food ingredients, including ingredients used in food fortification and enrichment. Meanwhile, her freelancing with Black Enterprise and helped her stay current on issues pertaining to the financial and business welfare of African Americans. As a general reporter for Black Enterprise she attended and reported on the Democratic and Republican National Conventions, where she interviewed Valerie Jarrett, senior advisor and assistant to President Barack Obama and U.S. Attorney General Eric Holder. Marcia has a Bachelor of Science degree in Agriculture with an emphasis in food science from the University of Minnesota, and a Master of Science degree in journalism from Roosevelt University in Chicago. En route to her secondary degree, she served as the editor-in-chief of the Roosevelt University Torch, a weekly, student-run newspaper. An avid photographer and videographer, Marcia is one of several employees at BLACK ENTERPRISE who interned for the publishing company as a college student. She lives in New Jersey with her husband, a food scientist; her seventeen-month-old daughter; and “The Cat”, but still considers Chicago home.