Ever since the introduction of the Making Home Affordable and (HAMP) were implemented it became thought that the amount of modify my mortgage approved by servicers would balloon and that foreclosures would gradually decrease. In fact, exactly the converse has happened. Foreclosures are rising at a record pace while servicers continue to deny individuals adjustments on loans that should never have been approved. How did this happen and what can be done to fix it? The blame is shared by both the government and the banks themselves.
When the MHA and HAMP programs were revealed there was widespread relief among homeowner's. Sure there had been panic about the rapidly falling value of homes and adjustable rate noteswere getting out of hand, but now the government had stepped in and offered a solution. What was not known at the time was that the MHA and HAMP programs were only available to those with loans under Freddie Mac or Fannie Mae. Immediately, many borrowers were turned away by their loan company and simply told, “Sorry, you don’t qualify under these terms”. As a result, letters went out to governors, representatives, senators and anyone else who would listen in a position to change these programs. The response? Nothing. In its mind, Congress had done its part. There are obama loan modification programs out there, people should use them.
The only problem with this is that the guidelines and subsequent red tape that ensued proved to be an almost insurmountable barrier for individual homeowners to surmount. Countless stories in blogs, interviews and news reports all tell the same tale: a homeowner contacting their mortgage companies to try a loan modifications, being yanked around from different agents and offices and being told conflicting updates on the process, all while time ticks down on their property being foreclosed. mortgage companies are not required to tell homeowners why their notes modification has been turned down, and there are few set guidelines or criteria that the government requires lenders to conform to. After meeting a few basic guidelines, it is entirely up to the individual lenders on whether to approve a loan modificationsor not. All this has done is increase the confusion of the process by introducing conflicting accounts of what situations qualify for a loan adjustments.
It is little known that mortgage companies receive subsidies from the government under these programs for setting a borrower in a “trial loan modification”. This is a program in which the banks lowers the payment due on the loans while they review placing the borrower into a permanent modifications. There is no guarantee of a permanent settlement on the debt, and yet the lenders still receives money from the government merely for thinking about helping someone.
Friday, November 20, 2009
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