So we've all heard about the HAMP modification program. It's been in the news for quite some time now and modification companies still suggest that struggling homeowners should scrape together their last few dollars and throw it to them so they can save their home.
The tragedy in this process is two fold. Firstly how someone can take a fee from another party without adding value is beyond me. There is no extra incentive for a servicer to accommodate a third party request for modification. Meaning that the third party adds no additional value to the homeowner who files his/her own paperwork. The only exception to this would be the third party document preparer who suggests that they are familiar with the banks qualifying process and what the borrowers income, assets, and other qualifiers need to be in order to get approved. Of course if this is the value that a modification expert intends to provide it seems obvious that the provider intends on manipulating the correct numbers and to provide the bank with the numbers that would fit in their box for approval regardless of what the true figures may be. This leaves the borrower on the hook for signing a document that does not reflect the borrowers true position and giving the bank leverage to pursue recourse based on fraud in the future long after the modification "expert" has moved on. Sounds pretty close to some of the foolishness that got us into this mess in the first place to me.
The other issue with modifications is that the servicers and banks are not incentivized to secure these modifications with homeowners. The financial incentives are far greater to bleed a homeowner dry with trial periods, late fees, lost paperwork, and other nefarious charges in order to line the pockets of the servicer. The bank of course has no intention of reworking any loan as it would have to purchase it back from the end investor or at a minimum get the investor to agree to new terms in order to facilitate an actual modification.
So you are asking yourself... "How come some people are getting modified?" The answer is that they aren't. The bank will occasionally alter front end terms on a security by giving the borrower a temporary teaser rate adjustment. While the bank shows the borrower the new payment in 16pt bold and italic font what they fail to highlight is that the fully indexed rate is not being reset but is actually accruing as a negative amortization feature and the additional interest that would've been paid had no adjustment been offered will eventually find it's way back into the loan re amortized over the course of the remaining unadjusted period or as a balloon at the end of the loan. And of course you know I don't even need to explain principle reduction because regardless of how far upside you are the bank is not making an adjustment.
So what are you to do? The secret to success when dealing with the banks right now is creating leverage and frankly getting mad enough to want to stand up for yourself and fight back. The banks have committed levels of fraud in servicing, securitizing, fees, and origination that would take a hundred blogs to explain even in it's most basic forms.
As Marcy Kaptur Congresswoman from Ohio recently shouted from the floor of congress... "People are rapidly losing hope and trust. They believe their government has been captured by special interests and no longer cares about them, and they are right.... You don't leave your home until you have had adequate legal representation!"
People please if not me find someone to protect you. Foreclosure, modifications, NOD's, Servicing, etc. are all legal procedures by nature. You have laws that can protect you and can bring the banks to the table in an honest and fair negotiation. Don't be willing to stand by and continue to let them have their way with you and every other hard working American homeowner who is so discouraged they have lost hope. Don't throw your money away at modification processes that have proven time and again that they are unsuccessful take some control back and fight for what's yours!
http://www.msnbc.msn.com/id/41299299/ns/business-real_estate/ Please Read and Get Mad!
(found this the day after I posted this blog)
A BILL to Terminate the Home Affordable Modification Program of the Department of the Treasury
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