Just in Case You Think the Banks Will Ever Start Dealing Fairly With Mortgage Mods …

… think again!

Nearly three years ago, California Congresswoman Maxine Waters was filmed by ABC News getting the run-around while trying to help her constituents negotiate with their banks to restructure their mortgage loans.

Here’s the story, which aired on Nightline in January 2009. It certainly shows that nothing much has changed since then …

I initiated my ongoing quest for a mortgage loan modification in March 2010 and what Rep. Waters went through looks absolutely familiar to me. Wells Fargo strung me along for seven months before denying me both for HAMP and for their “in-house” mortgage mods. And they’ve been playing similar games ever since, both with me and with my legal counsel.

Waters was one of many members of Congress who appealed directly to Treasury Secretary Tim Geithner in 2011 for specific changes to HAMP, including adding an independent review process for homeowners denied modifications under the program. Of course, that hasn’t happened, as I well know from my experiences of having Wells Fargo fabricate both income and expense figures during at least two of my HAMP reviews.

So … if you’re playing the delay game with your bank while not paying your mortgage so you can save up some $$ to re-settle, more power to ya.

But if you’re hanging on, depleting your savings scraping up money to keep paying while waiting for the Obama administration, regulators, Congress, Treasury or the attorneys general to take some real action to make the banks start dealing with homeowners in good faith … you might want to consider that nothing much substantive has been done to benefit average Americans in the past three years while millions of good, honest, hard-working people lost their homes.

“… if you have a set of rules for which compliance is completely voluntary and no meaningful consequences for those who violate them, having all the audits and reviews in the world are not going to make a bit of difference. It’s why the program has been a colossal failure.”   
~Neil Barofsky, former special inspector general for the Troubled Asset Relief Program (TARP), the bank bailout that provided the money for HAMP

I hope you will make the best choices for yourself and your family and won’t get bogged down in false hopes and “should-have-beens.” Certainly nothing is going to change on the political front until after the 2012 election. (And it’s unlikely it’ll change for the better afterward, either, regardless whether the current impotent administration comes back or one of the GOP’s seemingly endless supply of wingnuts wins.)

2 thoughts on “Just in Case You Think the Banks Will Ever Start Dealing Fairly With Mortgage Mods …

  1. I think we’ve been angry about the result, but not the cause for far too long.

    The cause is this, ANY Debt Restructure by a commoner, a main street person, a 99%er, must include a credit default by the debtor BEFORE they can get their debt restructured.

    The problem is that having a credit default on one’s record means any new terms are more likely to be WORSE than what one already had. Even HAMP operates under this credit default before one can even apply for HAMP, paradigm.

    So all we have to do is band together and DEMAND that the debt restructure process be changed. I recommend a Justifiable Debt Restructure as the best way for main street to hold onto to what they still have and be able to fight back in the future.

    For those interested about Justifiable Debt Restructure, here is an article I wrote about it. http://occupynews.blogspot.com/2011/11/justifiable-debt-restructure-would.html

    • Thanks for the link to your blog, Allesandro. You make an interesting point about the banks basically forcing people into default before they’ll even begin to review (or at least say they’re reviewing) the loan for modification.

      That’s not what’s supposed to be happening, however. At least, not for HAMP, the guidelines for which explicitly state that borrowers do not have to be in default to qualify for a modification. HAMP even included financial incentives for banks to modify loans for people who were still current on their mortgages but who were clearly on track to default.

      The problem here is the secret method for determining whether a borrower is in “imminent default.” I clearly was by any version of math you can imagine, but was found (even after missing two payments) not to be in imminent danger of defaulting on my loan. But the banks don’t follow the guidelines and won’t reveal the numbers they use to arrive at their decisions.

      Freddie Mac’s servicing guidelines also specifically state that borrowers do not have to have missed mortgage payments to qualify for a modification. My loan servicer just pretty much ignores the guidelines about everything, including this issue.

      Until the justice department starts indicting bank execs for fraud, it just won’t matter whether there is a Justifiable Debt Restructure program/law. (Though I think it’s a very sensible idea to have such a thing.) If forging foreclosure documents doesn’t land anyone in jail, failing to restructure loans for deserving folks who hit by circumstances beyond their control doesn’t have a chance.

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