Mortgage Modifications ARE Scams
September 23, 2010
Mortgage modifications are merely another bank bailout by the government. These modifications provide government assistance to mortgage companies but mortgage companies are reluctant to approve the modifications. There’s a trap here, and I’ll be getting to that in a second.
When the Home Affordable Modification Program (aptly, “H.A.M.P.”) hit the scene, it appeared that the program, while narrowly tailored, might yield some good results for people with bad mortgages. Not so.
My experience dealing with clients has been that mortgage modifications NEVER work. I have not seen one succeed yet. I assume that someone, somewhere has had a mortgage modification be approved.
THE TRAP:
1. The hypothetical homeowner (we’ll call him “Grover.” Grover is such a typical name, after all.) loses his job and cannot afford mortgage payments anymore.
2. Grover calls the mortgage company and asks for modification options.
3. Mortgage company rep tells him that he’s not eligible to look at loss mitigation options, including modification, until he’s behind on his mortgage.
4. Grover doesn’t pay his mortgage for a month, technically putting him in default. Grover then calls the mortgage company back.
5. Mortgage company offers to put Grover in a trial mortgage modification for, say, $500 per month less than he was paying.
6. Grover makes all the trial payments faithfully and on time during the six-month trial period. Good Grover.
7. At the end of the trial period, the mortgage company informs Grover that he does not qualify for the modification AND – I kid you not – he’s $3,000 behind on his mortgage payments!!
8. Predictably, Grover has no way to bring his mortgage current and make the higher mortgage payments. The house goes into foreclosure and Grover probably files for bankruptcy as well.
This scenario is repeated ad infinitum, ad nauseum.
AND ONE MORE THING: the web site for mortgage servicers, found here, is run by none other than FANNIE MAE! What is this world coming to?
It makes me angry that incompetent quasi-governmental organizations are allowed to control the fate of thousands of homeowners. Remember when Fannie Mae, Freddie Mac, and Indy Mac collapsed? Well, we’re still footing the bill for that.
I’m doing my level best not to explode into a tirade of electronic expletives.
Yes, this just happened to us…after 9 months of paying on time payments, we were told we didn’t qualify because we hadn’t sent them paystubs. We had: four times, three times by Fedex. Despite having a tracking number they said they didn’t receive them.
A week after telling us we were not eligible for the modification they sent us a foreclose notice. We have three weeks to pay $8,000 in arrears.
And yes, before we applied for the modification we had made on-time payments for four years…the entire life of the mortgage.
They LIED to us and said if we didn’t qualify that we would just go back to our original mortgage payment with no problem.
Now we’re looking at losing our home…scumbags!
Thanks for the comment, Stephanie. I’m sorry to hear about your trouble. Your situation sounds very similar to what I keep hearing from clients.