Loan Modification Program Leaves Many Worse Off Says WSJ

The government's loan modification program has left "some" struggling homeowners "worse off" than they were before, according to an article in the Wall Street Journal.  

The WSJ reports that the U.S. Treasury announced on Monday that nearly 1 in 4 homeowners who were offered lower payments were eventually "weeded" out of the program because they failed to make payments, didn't provide all the financial information they needed to qualify or were found to be ineligible.

Under the federal Home Affordable Modification Program, or HAMP, homeowners are first offered a trial modification. If the borrowers make the modified payments and satisfy other criteria, the trial modifications become permanent, ensuring a reduced payment for 5 years. 

According to the WSJ article, while awaiting the approval of their permanent modification some borrowers keep making payments, "exhausting their savings in what may be a futile attempt to save their homes. They also incur fees and delay taking action that might give them a fresh start in a more affordable home." 

The problem with the WSJ article is, in our opinion, that it only touches on the real reasons that homeowners are left in a worse position by several banks participating in the HAMP. Our attorneys have been hearing stories every day from homeowners who offered trial modifications for 3 months, but who are then left waiting by the bank for 7 8 or even 9 months before getting an answer on their permanent modification. When these homeowners are finally told that they don't qualify, they are also told that they now owe thousands of dollars on their home and that if they cannot pay, then they will lose their home to foreclosure.

In so many instances, these same homeowners weren't even behind on their payments when they first started the program! But, since they've been kept waiting in the trial modification period for so long with no answer, they no longer have the thousands of dollars to bring themselves current. And, to make matters worse, at least one large bank has been trashing homeowners' credit reports during the trial period so that the homeowner cannot even get a new loan to bring themselves current.

Does this sound like your loan modification nightmare story? If it does, Phillips & Garcia wants to hear about your experiences with CitiMortgage, Bank of America, Wells Fargo or any other bank. Contact us to share your story.

Victims of wrongful foreclosure lockouts and seizures have rights. Phillips & Garcia, P.C., a leading law firm in wrongful foreclosure and seizure cases, is now taking cases in any state where there has been a wrongful foreclosure, lockout or trash-out of a borrower's home. Although we are licensed in Massachusetts, we can associate with qualified attorneys in your state.