Late Fees Assessed During the Loan Modification Process

We have been watching the issue of banks charging late fees during the loan modification process.  We have examined at least one borrower's loan statements which show late fees being charged before and after loan modification approval.

Can the banks charge late fees before and during the HAMP loan modification process?  The Treasury has been clear on this point.  The HAMP guidelines state:  "Unpaid late fees will be waived for the borrower.  These include late fees prior to the start of the Trial Period and accrued during the period."

The HAMP participating banks cannot add late fees to your loan as part of a loan modification agreement.  These fees, incurred both before and during a loan modification trial period, must be waived.

We suspect that banks, who are being less than diligent in processing loan modification requests and stopping wrongful foreclosures, have not been waiving late fees in conjunction with loan modifications.  We have heard from at least one borrower that banks are not waiving late fees and have continued to charge late fees to borrowers who are current on a temporary or approved loan modification.

Borrowers entering in loan modifications need to read the loan statements they receive from their bank very carefully and also need to examine their credit reports on a regular basis.