Was your loan modification denied?
Mortgage holders who have been turned down for loan modifications can at least take solace in a bit of clarity. Starting today, the Treasury will require financial institutions to say why they reject requests. Danielle Karson reports.
More on Housing - Real Estate
TEXT OF STORY
Bill Radke: A report card on the federal government's programs to reduce foreclosures is not good. Just 12 percent of borrowers have gotten lenders to modify their loans. So starting today, the Treasury Department will require financial institutions to say why they reject requests. Reporter Danielle Karson has that.
Danielle Karson: One in 12 mortgage loans are circling the foreclosure drain, according to the Mortgage Bankers Association. Housing advocates say when banks reject a loan modification without a reason, a borrower can't make needed changes. Now that banks will have to explain why a modification didn't go through, it will help because:
Kathleen Day: The public will start to get a sense of why these loan modifications aren't happening faster, and on a bigger scale.
That's Kathleen Day with the Center for Responsible Lending. She cautions the new requirement can only help so much.
Day: Unless there is some stick that says that if you don't do it, someone else is gonna do it for you, the pace really won't pick up to where it needs to be.
Advocates say bankruptcy judges should be allowed to force banks to modify loans. A spokesman for the American Bankers Association says a big reason lenders often deny a loan modification is that the borrower is out of work.
In Washington, I'm Danielle Karson for Marketplace.
Comments
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From Phoenix, AZ, 01/26/2010
I'm currently with Litton Loan and I am going through the same thing. Litoon has offered me a repayment plan through NACA and now they are saying that the investor has not approved it an my loan is in the upper management level to find out why. The rep said you haven't been declined yet so continue to make your modification payments on time and hopefully soon will have a decision for you. Since, I haven't signed any documents since Litton want send the modification documents. I assume that I am still bound by my current rate and payment.If they never send the loan modification payments.
From Vallejo, CA, 01/15/2010
Despite the fact that i did all the things mentioned above during Loan Modification process, my home was sold from under me. I got an approval letter in Sept that said I should start paying in NOV. When I tried to make my first payment, my bank told me they had already sold my home Sept 1st! They said it was a mistake but that there was nothing I could do at this point. They no longer answer any of my calls. I now have an eviction notice from the new bank owners. I have no where to go. I am not sure how this is fair and or legal. My bank told me several times that durning the loan modification process the home would not be foreclosed on...PLEASE HELP!
From Lehigh Acres, FL, 01/08/2010
Bank of America has asked for paper work for our mod because the original paper work was now to out dated to use (4month) We called at the very minimum once a week "Its in Review" is all we were ever told. We called again and were denied at no point and time until we were denied did they say anything about the paper work . So we resubmitted all updated paper work and one month and a half later we just got the call we qualify for the home modification but will not be given one (?) . our only option is to pay all fees up front and continue with our $2400 dollar house payment that did not include Tax/ insurance. We were looking for even temp. Help (2 years) but they have none to offer. I guess I must say goodbye to my home I am so very sad that they would rather take our home then offer temporary help. I don't think I will buy another house again. Its very sad but , I walk away with my Family still intact and that is a Great blessing.
From fenton, MO, 12/28/2009
My wife and I were told to file for the "Obama Plan" We worked with them GMAC Mortgage for months. They finally tell us it is approved. Then we receive information that it is not approved. What a lying bunch of folks. No one there can keep track of what one person ssays from day to day. What a mess.
From escondido, CA, 12/04/2009
I lost my home to Litton Loan..It took them 6 months from the inital filing for a mod to say I didn't qualify.I hired an attorney and they took another look at the package. Two days before the forclosure sale date they again denied us..They said that my income was unsustainable..I have been employed for over 30 years straight, with two weeks of unemployment when I returned from Viet Nam..The kicker..I was working on a forebearance agreement with litton, send us 25,000 dollars and we will work out a repayment over the next two years..I was desperate and ready to go for it, until I recieved a phone call from a Litton rep on her personal cell phone telling me not to send them any money, my account was tagged for liquidation. they had determined that I had lots of equity and they could re-coup all of there cost at a forclousure sale. Litton got every penny that was due on the load, including 14,000 of fees that appeared the day before the sale. I thank God that rep had the decencey to call me on her cell phone..she told me they record all the calls so she couldn't tell me when I called..I am now pursuing a law suit against Litton hopefully Someone in the white house will wake up, but I don't think so. Want to contact me about a class action suit, feel free..Rabele7@aol.com
From Orange, MA, 11/05/2009
Okay, talked to Litton Loans, yet again, now asking WHY they say I owe 1600 plus a month, when I used to owe 1289, BEFORE the temporary workout plan. Well, even though nothing is currently in escrow, NOW they are ADDING the tax and insurance TO my mortgage, even though I pay the insurance monthly, even while on this plan. Fine, then for EVERY MONTH I am in this trial modification, which again, is going ON AND ON, IF IT EVER DOES GET FINALIZED, I will still OWE THEM ALL THE MONEY THAT I DID NOT OWE TO THEM WHEN THIS ALL BEGAN BACK IN JULY. Including OWING them the MONEY I have ALREADY PAID MYSELF TO COVER MY HOUSE INSURANCE, interesting concept. WAKE UP WASHINGTON!
From Orange, MA, 11/03/2009
I am in the same boat with Litton Loan Servicing, they encouraged me to apply.
Now I have been put into a default, since the modified payments are lower--AND I can't seem to get them to FINALIZE the modification. They claim that they need MORE documents, when I send them, they say they need OTHER documents, it has been a real nightmare. It's great to read that they now MUST give reasons for a denial, as I DO QUALIFY according to the gov website! I don't get why all the delays, other than, it seems they are taking houses after they deny--very RAPIDLY, since they force the homeowner to SIGN AWAY RIGHTS, just in order to apply for the modification, which they obviously need. I've had to go on exhorbitant repayment plans, taking up over 50% of my monthly income, in the past, so maybe that is the plan? Make me pay them back all the missing money? And eat up all my income to do it?
From Austin, TX, 10/23/2009
I started the modification process in March with Skank of America. In July, I was told we qualified for the Government Program and documents would be sent. Today is October 23, and the bank does not know when documents will be sent. For the naysayers who think this is not their problem, wake up. When the home next to you forecloses, what do you think happens to your property value? TARP money has already been given to the big banks. There is no reversing what has already been done. The banks took the money under the pretense of providing much needed relief to stabilize the housing market. What a bunch of crap. The regulations were written with the words "may" instead of "must" and the banks found these loopholes and will be keeping the money. If we think the economy is bad now, just wait a few months. It will get even worse.
From GA, 10/18/2009
We were put on a temp mod and then told we were being pulled off. Then we were told we could get the mod and then a day before foreclosure told us we couldn't. When we were in mod we made all our payments in time. We have six children and are looking at being displaced. We were told that they would give us cash ($1650) if we signed a statement saying we wouldn't sue and we'll be out w.in 15 days.
From CA, 10/07/2009
I was denied a mod and referred to ASND, Inc by my bk attorney. Have you heard of this company/
10/07/2009
This is such a complicated political issue that has developed around many people's unwillingness to ask themselves a simple question: Can I afford this loan? Rather than face the music that you can not, and moving on, advocacy groups want you to modify a fundamentally lousy loan into an even worse one, for longer. The Center for Responsible Lending wants modifications because it will be a windfall for its affiliate banks. They can then gobble up all these modified mortgages and for all we know re-sell them to Wall Street as default swaps.
From Medford, OR, 10/05/2009
Hello Claire, I was listening to radio broadcasts about Loan Mods and thought of you... There were two of interest.
Hope this finds you well and moving forward!
Amy Crevola, Americorps
Community Housing Services
Corvallis OR
From Columbus, OH, 10/04/2009
The ticking time bomb for the whole loan mod program is the PSA (Pool and Servicing agreement between servicers and investors. With very low limits of mods allowed. Lenders and servicers aren't going to risk investor lawsuits. No one seems to have addressed this problem even though it was brought up before Congress during hearings on loan mods. It would seem that this will be another big blow to distressed homeowners hopes. This whole program was flawed from the get go.Thousands of homeowners are losing their homes, while the servicers cover their asses.
From Lake Havasu City, AZ, 10/03/2009
We also lost our home to trustee sale while in modification. We were told on several occasions we qualified for modification, but nothing ever came through.It was a continuous repeat of providing financials. By the time it was in review for modification, our financials were old, and requested again and again. We have been in contact with Countrywide for months hoping to get a modification, but in the end discovered they would never modify, as the Investor "Bank of New York" did not participate in modifications. The underlying reason is kept secret from the borrower. The Investor is NEVER contacted in your pursuit of a modification. It stops short with the servicer "Countrywide".
Countrywide will have to buy the loan back should they modify your loan, due to their contract with the Investor. Of course, Countrywide(BofA) will not allow that to happen, due to their collapse. I'm sure Washington does not have knowledge of this. For all you borrowers who are scratching your head and lost your home, perhaps you are a victim of this.
Any law firm out there who would like to take this on?----I am sure their are possibly thousands of homeowners who lost their homes because of this. Bank of New York just lost $200,000 by foreclosing, with a now vancant and deteriorating property, in addition to killing the values for the neighborhood. We simply wanted to have our loan payments restructured--how does that make sense? We are deeply saddened we lost our final home. In the end they will just ask for more "bail-out money--so why should they care!
From Phoenix, AZ, 10/01/2009
Being told the reason doesn't help save the house because if its a non judicial foreclosure they can sell immediately after the sale date. No time to react to file Chap 13 or other options. At their mercy not to sell your home the next day. Giving you the reason doesn't help much. Further: Many More Homeowners to Lose Homes - the story not reported yet As an attorney at a major Phoenix law firm explained to me, there is NO ENFORCEMENT provision in the Treasury/Fannie/HFA "directives" or "mandates" for the Home Affordability Program. While folks are getting trial modifications few are being given permanent modifications even when timely trial payments made and qualify under the Net Present Value (NPV) test. The banks can ignore all the guidelines and there is nothing we can do about it. We are totally at the mercy of the servicers per the law firm I talked with. It is reported that they get more fees when they sell the property. It is especially bad in non judicial states like AZ. More details that Washington Needs to hear and media report on: Folks all over the U.S. who qualify are being rejected and homes have even reportedly been sold even within days after being told foreclosure sales would be delayed. Foreclosure notices are being sent at the same time the homeowner is told their modifications are being worked on. In my case, and many others we submit required documents for the HAMP Plan (and mortgage owned by Fannie Mae) and being told not to worry and wait until contacted by a "processor." Instead they sent a foreclosure notice. If the servicer determines you are not eligible for a modification, it does not have to give any reason and can the next day sell your home with no notice, no time to take any action in a non-judicial foreclosure like typical in AZ, once the original 90 days has past. On 9/11/09 National Consumer Law center said ""Participating servicers violate the HAMP guidelines by selling homes at foreclosure while homeowners are negotiating loan modifications, requiring waivers of homeowner rights, and refusing to offer HAMP modifications to qualified borrowers. Lack of transparency in the application, review and turn down process exacerbates these problems." Attorney Jeff Barens warns about this in article of 9/11/09 �BEWARE THE �END-RUN� (SNEAK) FORECLOSURE� article at www.foreclosureDefensenationwide.com It reports the widespread practice of servers telling customers not to worry about the foreclosure notice, messes up the paper work and trustee sale is completed! I have had a six month battle with CitiMortgage with lies, screwed up paperwork and at their mercy to not do a no notice instant sale upon their whim, when I should easily quality for a HAMP modification and have been told it was approved twice. There are many frantic people like me that will do anything to keep our homes. We are not even looking for principle reduction just the 31% of income mortgage under HAMP where we pass the Net Present Value test showing it is better to modify than a foreclosure sale. But some servicers are selling our homes without notice anyway. I have 9 pages of documented notes call by call in my six month battle with CitiMortgage to save my home showing the lies and failure to meet the Fannie Mae and HAMP directives. Even my Hope Now escalation team person is running into the same problems when she tried to set up a conference call but unable to get the right responsible person or call backs from supervisors. And CitiMortgage is reported as much easier to work with than many of the other servicers. That is why the great in design, HAMP program is not working in real life. Servicers are starting mods but not approving them in the end. They are hiring lots of staff to contact folks to get them into mods, but not enough people to actually solve problems and get those that successfully complete the trial period approved. The forum at www.LoanSafe.org often has 2000 visitors at once. Anyone can read on the www.Loansafe.org forum details of so many frustrated home owners having so many problems with most servicers.The loansafe.org forum shows in the "real world" why the well designed HAMP program is failing due to massive servicer problems not the plan itself.
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