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Trial Loan Modifications...few turning into permanent fixes

By
Real Estate Agent with HomeSmart Encore - Las Vegas S.65708

Interesting article in the WSJ on Loan Modifications

By RUTH SIMON

The Obama administration said Tuesday that its mortgage-modification program has enrolled one in five eligible homeowners, a sign the effort is gathering momentum after a slow start. But so far few of those trial modifications are turning into permanent fixes.

Whether the program will ultimately be judged a success will depend upon how many trial modifications become permanent.

The administration won't release figures on completed modifications until December, but so far it appears that very few trial modifications are becoming permanent, often because of a lack of documentation

"It's a fiasco in the making," said Alan White, an assistant professor at Valparaiso University in Indiana, citing preliminary information about low numbers of permanent modifications and complaints from attorneys and housing counselors.

"The good news is you've gotten all these homeowners in from the cold and on these temporary modifications," Mr. White said. "The bad news is we are stumbling in getting all these people...all the way" to keeping their homes.

It's not clear yet what will happen to borrowers who make payments, but don't submit required paperwork.

"We have gone the extra mile," said Assistant Treasury Secretary Michael Barr in an interview. "Now it's up to the servicers to close the deal."

The administration continues to look for ways to address challenges in turning trial modifications into permanent fixes, a Treasury spokeswoman said.

Loosening documentation requirements should make it easier to complete some modifications, said Sanjiv Das, president of Citigroup's mortgage unit, which has finalized more than 1,600 of the modifications. Roughly 70% of the 68,000 borrowers in the program are current on their payments, Citigroup said.

Still, some borrowers say their mortgage companies have kept them in limbo for months. Gerald Bullock of Cincinnati said he has made seven trial payments and provided J.P. Morgan more than 60 pages of documents, but this week got another request for documents.

"We don't know if we have a house to live in or not," said Mr. Bullock, who fell behind on payments after becoming disabled in a workplace injury. "It just adds to [my] anger and depression."

A J.P. Morgan spokesman said Tuesday that Mr. Bullock's final modification was approved Friday and paperwork finalizing it will be sent this week. "Unfortunately, we mistakenly called him for additional documents," the spokesman said.

In an effort to get required documents, Saxon recently offered more than 5,000 Florida and California borrowers in the trial program $25 gift cards if they brought their paperwork to a nearby company event. About 15% responded, the company said.

Freddie Mac, the government-controlled mortgage company, recently hired Titanium Solutions Inc. to go door-to-door gathering needed documents. "Most of our borrowers got into the loan with assistance" and need similar help with the modification process, said Freddie Mac Senior Vice President Ingrid Beckles.

Susan Cook, a real-estate broker who works as a home-retention consultant for Titanium, said borrowers often report that they have sent in their paperwork "two or three times." But "there is always some little piece that is probably missing," she said.

Posted by

Dawn Barrier at HOMESMART ENCORE Las Vegas, Nevada

s.65708  

 

(702) 812-4550 

Las Vegas, Nevada   

 
 

 

 

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Comments(3)

Associate Broker Falmouth MA Cape Cod Heath Coker
https://teamcoker.robertpaul.com - Falmouth, MA
Heath Coker Berkshire Hathaway HS Robert Paul Prop

There needs to be a change in how the servicers act. They are making money at both ends.

Nov 12, 2009 02:05 PM
Evelyn Santiago, Managing Broker Heart Realty Group, Inc.
Heart Realty Group, Inc.. - Oswego, IL
Passionate About Real Estate & Our Clients!

As someone who does home visits for the mentioned company my experience has been that homeowners have sent paperwork many times and they keep asking for the same thing.  Many of these same homeowenrs tried on their own and were turned down and now that the lenders need to make the numbers for the government the lenders are trying to offer assistance.

The stories that I have come across are heartbreaking, lost jobs, dead spouses, medical conditions and yet people are willing to do anything from raiding their 401K's to borrowing from family and friends to make their mortgage payments. 

People want to stay in their homes.  Perhaps many people got encouraged to take out loans that were not the best fit for their financial circumstances, many used proceeds to pay off credit card debt and then interest rates adjusted higher, jobs got lost, people died, health issues came - not things we plan for.

Yet still the lender's play games, putting people through loops, losing paperwork, not documenting their files correctly, returning payment's back due to their own errors in customer files and other delaying actions.

Who is there to protect the homeowners that are making an effort to do the right thing despite what life issues they may be facing?  The lender's get rewarded and homeowners get to have their taxes bailout the lenders.

So hopefully servicers will be reviewed and tigher controls put in so they negotiate in good faith.

 

 

Nov 12, 2009 02:19 PM
Paul J. Molinaro, MD, JD
The Law Offices of Fransen & Molinaro, LLP - Corona, CA
M.D., J.D.

This post is spot on!

The trial modification is just another bank tactic to grab money - The banks were faced with upside down homes and non-paying homeowners, so they did what they had always been doing - whatever it took to keep their profits going - they promised to help homeowners if Uncle Sam would give them money, and they GOT BILLIONS in bailout money from taxpayers... they then gave the homeowners trial modifications to make it seem as though they were keeping their promises, and in so doing they continued to GET BILLIONS in bailout money PLUS MORE MONEY from the homeowners who otherwise would never have paid another dime to the banks... then when the time was right to foreclose - meaning the inventory was controlled and the borrower was out of any spare cash, sell the home through foreclosure and GET ANOTHER BIG PAYMENT... then if there was any kind of insurance against foreclosure, collect MORE MONEY on that policy.

This scam should not go without recourse. In California, there are laws in place to address such breaches of promise... and many law firms, mine included, take people who have fallen prey to the TRIAL MODIFICATION SCAM and make them into plaintiffs against their lenders. By joining plaintiffs with similar patterns of lender abuse together, these homeowners are able to afford aggressive litigation against the big banks. Visit dub dub dub dot fransenandmolinaro dot com for more information about my firm. If you are in another state, there are likely lawyers there who can help you.

- Paul

Paul J. Molinaro, M.D., J.D.
Attorney at Law, Physician, Broker
Fransen & Molinaro, LLP
980 Montecito Drive, Suite 206
Corona, CA 92879
(951)520-9684

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Feb 26, 2011 06:28 AM