BY ANDREW PEKOE/ASSOCIATE ATTORNEY – STEWART LAW GROUP
In foreclosure mediations, the biggest impediment to making progress in loss mitigation is an inaccurate or incomplete Request for Mortgage Assistance Form or RMA. Parties on both sides of the foreclosure should be familiar with the basic requirements of the RMA.
- “Cross every t and dot every i.” A common reason for RMA rejection is an incomplete or inaccurate form. The RMA asks for basic information but many borrowers leave this off. For example, one of the first boxes on most RMA forms ask for the borrower’s intent with the property: keep or leave. If that is not checked off, this will be an immediate speed bump on the path to settlement, since the Bank will not know how the borrower wishes to proceed in loss mitigation.
- Stale documents. Another common issue involves “staleness” of documents. Most banks require the three most recent paystubs, bank statements, etc. After 90 days these documents are considered “stale” and are no longer acceptable for the purposes of loss mitigation review.
- Federal Forms. The RMA package usually includes some forms issued by the IRS. Often, a mistake is made on a form but the borrower submits a corrected copy with strikethroughs or whiteout. Such corrections will be rejected by the bank and the IRS. If a mistake is made, a new form must be filled out. Copies of all federal documents are typically available on the servicer’s website.
- When in doubt, include it in the RMA package. Often times a borrower will be unsure if they need to include certain documents, usually supplementary documents. Remember, the bank needs the complete picture of the borrower’s finances in order to evaluate if loss mitigation is appropriate. If it helps explain the borrower’s finances, then it would be wise to include it in the RMA package.
- Finally, include the loan number on every page of the RMA. The loan number is the most expedient way the bank can cross-reference the borrower’s RMA with the borrower’s account. Including the loan number on every page will ensure that all pages of RMA are kept together during loss mitigation review.
This is by no means an exhaustive list, other issues may come up during the loss mitigation process. These suggestions should make it easier to get the parties working together to achieve a faster resolution.