If you're behind on your mortgage or facing default on your mortgage payments, and want to keep your home, you should speak to a home preservation specialist or an attorney immediately. The loan modification process (part of a suite of potential alternatives to foreclosure your mortgage servicer refers to as "loss mitigation") is fraught with chances to misstep, which despite your best efforts may cost you your home. Many of those missteps may not be your fault, and without the assistance of counsel or a HUD-certified housing counselor you may not recognize them or be able to prove that your servicer is to blame. 

Since January 2014, many servicers have had to follow regulations that demand they meet strict deadlines and disclose a great deal of information about your loss mitigation application, your eligibility and ineligibility for various alternatives to foreclosure, and your right to appeal their determination of eligibility or ineligibility. If they follow these guidelines, their customers are likely to reach an outcome that is beneficial to them. However, if they do not follow these regulations, servicers may be liable for damages, which, in some cases, could pay a portion or all of a homeowner's past-due payments. 

Unfortunately, even with counsel, fault can be difficult to prove, but there are a few things you can do to protect yourself and help your attorney reach a good outcome. 

1. Never trust that your servicer's advice is in your best interest.

We hear it all the time: servicers tell their customers that they need to be in default in order to be considered for a loan modification. Servicers advise homeowners "not to worry" about the foreclosure lawsuits they file against homeowners, explaining that it's "just something our collections department does". They tell homeowners that all they have to do is keep working on a loan modification and not to respond to the lawsuit. 

Despite providing advice and guidance to its customers, if you're in foreclosure, your servicer will flatly deny any advice it gave was meant to be relied upon, since it is a business and is concerned foremost for the interest of its shareholders, not its customers. That does not mean that it cannot be held to account for advice it has given you or promises it has made, but it does mean that you will be in for a fight if you have followed your servicer's advice to your detriment. Don't trust your servicer without verifying the advice you're getting from the servicer by asking a lawyer or housing counselor about the advice. Following this rule will help protect you from some of the worst abuses. 

2. Keep everything your servicer sends you.

Especially when you're in default and applying for some sort of loss mitigation, you should receive a lot of letters from your servicer. All of them are important, and many are governed by the regulations linked above. You should keep all of these letters. Moreover, since you cannot always trust that a letter was sent on the date it claims, you should keep all of the envelopes these letters come in. The envelope will have a postmark date on it, which can be invaluable when trying to prove a required deadline was not met.

3. Keep a copy of everything you send your servicer.

One of the disclosures your servicer must send you is a notice that your application is not complete. It must outline what documents are missing and give you an opportunity to send them. If you do not provide necessary documentation, your servicer can deny you any loss mitigation option. Keeping a copy of what documents you've sent -- and when and how you sent them -- may protect you and assist you on any appeal of a negative determination.

4. Take notes.

When speaking with your servicer on the phone, make a note of when the phone call took place, who you spoke with, and what advice or guidance the servicer provides you. 

The Consumer Financial Protection Bureau has issued proposed new rules for payday lenders, with the goal of preventing what abuses it can in the industry. I say "what abuses it can prevent" because, unfortunately, the CFPB has no power to control interest rates, which in the payday lending industry reach astronomical highs. One interpretation of Kentucky's payday lending statute allows for an annual interest rate exceeding 400%. So, seeing that almost 80% of borrowers must re-borrow after 14 days because they can't afford the fees, the CFPB took aim at preventing the "debt trap" by going to the "source": people who borrow more than they can afford to pay back.

The proposed rules require that lenders evaluate potential borrowers' ability to repay before they loan to them. The idea is that this will prevent people from continuing re-borrow every two weeks or month because they cannot afford to pay the entire amount. The way this works in Kentucky, a person may go to a payday lender, borrow $500.00 and have to pay back $589.25 in two weeks. Most often, when the two weeks is up, the person cannot afford to pay $589.25, so they bring in that amount but immediately re-borrow another $500.00 (with another $89.25 fee due in two weeks). Left unchecked, that can mean over $2,000.00 solely in fees per year, without the borrower even beginning to pay down their principal balance. The CFPB believes that if lenders can only loan to borrowers that can repay by the due date, it can prevent harm to borrowers who can't. 

For the borrowers who would otherwise be unable to get payday loans, the rules also propose two options that do not require looking at the borrower's ability to repay. The first requires that, if the borrower is unable to repay their loan when due, the lender can provide subsequent loans, but must reduce the principal each time. The second allows the lender to offer two more loans at the same interest rate, but then must provide an "off-ramp" to the borrower wherein they can pay back the principal without additional fees. 

In any of these cases, a borrower could only receive three loans before having to "cool off" and wait 60 days for the next loan. During that time, I do not know where they might turn if they need additional money. Hopefully, not to the even worse option of online lenders.

While these measures may all help if adopted,  my hope is that instead of these "last resorts," people will turn to less onerous means of making ends meet. Payday loans seem quick and easy, but they are anything but.