In Case You Thought the Mortgage Mod Process Had Improved

While I was clearing out some old news items to make way for my website’s more up-to-date and topical News page, I ran across this February 2011 clip from MSNBC’s now-defunct The Dylan Ratigan Show.

Listening to Ratigan and his guests describe the way banks were scamming homeowners with HAMP trial modifications, it struck me that I’m reading about some of the same practices from commenters to my blog posts in 2015.

This PBS NewsHour segment I dug up from October 2010 also tells a story familiar to my readers, including homeowners’ reports of spending endless hours on the phone, sending paperwork over and over, dual-tracking and multiple (and often unresponsive) assigned contact people.

“You get put under a lot of stress, trying to get help. And it’s not there.”

Wow! The more things change, the more the big banks have been screwing over honest, hard-working people for years with the collusion of the Obama administration, Congress, the courts and every regulatory agency that’s supposed to look out for consumers.

And, while we’re on the subject, this headline from intrepid (and prescient) blogger Martin Andelman might just be my favorite:

THE JURY IS IN: Obama’s Foreclosure Program Run by Morons… and Trial Modifications are the Biggest Loan Mod Scam Ever

If I knew then what I know now – and what Martin Andelman correctly predicted – I would have saved myself a whole lot of work and anguish and walked away with a bigger bank account and a smaller waistline. (That stress eating while sending out your 90th set of loan mod docs really adds up!)

Well, the morons are still in charge and thanks to the way campaigns are financed now, they will continue to be. And trial mortgage loan modifications are still a big scam.

I’ve found a few other information gems I had forgotten about – including updated facts and figures from sites I haven’t looked at in years – that I’ll be sharing in the coming weeks.

Good News for Homeowners Cheated by Wells Fargo With Bogus Trial Loan Mods

Yippee! All the homeowners Wells Fargo blatantly cheated with their bait-and-switch trial mortgage modifications finally have a legal leg to stand on.

The 9th U.S. Circuit Court of Appeals (whose decision is law in several  western states hard hit by foreclosure, such as California, Arizona and Nevada) said “Wells Fargo was required under the federal Home Affordable Modification Program to offer loan modifications to borrowers who demonstrated their eligibility during a trial period.”(Reuters article)

Nice that some part of the legal system has called out the bank on its the obvious game playing, requiring people to complete a trial modification plan to show ability to pay the lesser loan amount and then making up some fake reason to deny the permanent mod. The banks have raked in millions of dollars with this strategy, never intending to re-structure the loan but still giving people hope and getting them to pay money that was never credited toward their mortgage loans.

Way to call a fraud a fraud, 9th Circuit! And bravo to homeowners Phillip Corvello and Jeffrey and Karen Lucia Phillip Corvello whose lawsuit led to the ruling. From Reuters again:

Both the unsigned majority opinion and a concurring opinion by Circuit Judge John T. Noonan faulted Wells Fargo’s drafting of the trial period plan, saying that to rule in the bank’s favor would render the benefits for borrowers illusory.

“No purpose was served by the document Wells Fargo prepared except the fraudulent purpose of inducing Corvello to make the payments while the bank retained the option of modifying the loan or stiffing him,” Noonan wrote. “‘Heads I win, tails you lose’ is a fraudulent coin toss.”

If you completed a trial mortgage modification and then were denied a permanent mod, you can sue the b@$t@rd$!!

(Oh, and by the way. Guessing Wells Fargo wasn’t the only one gaming the HAMP program in this way. The other big banks seem to have coincidentally jerked mortgage holders around in exactly the same ways.)

A Mortgage Mod Scam in the Making

One of my nice readers submitted the following question in the comments section of my recent post about what a scam the banks’ trial mortgage modifications are. I hadn’t covered the issue of bank-solicited mods in that piece, so I thought this reader’s question and my answer needed to be featured in an actual post for all those people who couldn’t ever imagine their banks blatantly trying to set them up to lose their homes.

Helpme in Jersey writes: “I need help. We just received the packet of information from Wells Fargo for our trial modification. I have until next Friday to make my decision. The payment is something we can afford but I am worried that this is a scam. I want to add that I had not contacted them to see if they would modify our loan. They sent us this paperwork.”

Here’s my answer, something to think long and hard about if you’re in a similar situation:

Be very careful “Helpme in Jersey.” Don’t agree to anything that you don’t have in writing signed by someone from Wells Fargo. And ask lots and lots of questions before you wade into the mortgage mod quagmire, especially if you are current on your mortgage and can afford the payments you have.

Be aware that the banks play a nasty little game where they solicit you for a modification – the wouldn’t it be nice if we just came along and gave you a lower payment come-on – as a way to lure you into their bottomless foreclosure pit.

They start with a perfectly rational-sounding trial modification and instruct you to pay an amount lower than your contracted mortgage payment for three months (or sometimes longer.) What they don’t tell people (or they lie about) is that during those three months they will report you to the credit agencies as delinquent because you aren’t paying the amount your mortgage contract calls for, even though they told you to pay that amount. Oh, and the trial period payments generally ARE NOT applied to your mortgage; they go into some secret account never to be seen again.

Even if you make all the “trial mod” payments on time and jump through any other hoops, such as sending them reams of paperwork one or many times, chances are at the end of the trial period they’ll inform you that for some made-up and usually vague reason that you haven’t qualified for a permanent loan modification. At that time they’ll demand a balloon payment including the unpaid amount from the trial period (yes, even though you paid the amount they told you to pay) and any fees they might have made up to tack on. If you can’t come up with this balloon payment in a relatively short time, you get thrown into foreclosure because you are, at that point, technically three months delinquent on your mortgage.

Now you have to fight off their relentless foreclosure machine, which seems to move forward only, no reverse. Once they have their sights on you, it’s very difficult to get them turned around. And, because your credit has taken a hit, you might not even be able to refinance somewhere else to escape.

I urge you to speak to an experienced housing counselor or foreclosure attorney – someone actually in the trenches – before you make any changes to your mortgage.

Did I miss anything in my advice to Helpme in Jersey? Anyone have any other ideas how to keep this person from falling prey to Wells Fargo?


Yes, Trial Mods and Forbearances are Part of Wells Fargo’s Scam

Special Forbearance plans and Trial Modifications are just Wells Fargo’s stalling tactics, requiring loan mod. applicants to pay in money that generally isn’t applied to your mortgage to somehow pre-qualify to be re-reviewed for a loan modification. This is just a load of BS. If you are offered a “special forbearance,” that doesn’t get you any closer to a loan mod. Even if you make all the agreed-upon payments on time, you’ll still be asked to keep sending paperwork over and over. You’ll be reported to credit agencies as delinquent on your loan during the forbearance and/or trial mod. period – even though you are making the payment Wells Fargo specifies. Your loan will likely also still be progressing on the track toward foreclosure (the deadly dual-track system.)                          Read more

Granny vs. Wells Fargo – This series of videos documenting a conversation between two women seeking a loan mod and an employee of Wells Fargo’s Office of the President will sound familiar to anyone who has been playing the delay-and-deny game with any of the big banks. Can you count the lies the WF rep. tells?