Dubiln Packard

Home Loan Modification

Home Loan Modification

The process can be frustrating, the paperwork requirements are overwhelming, and banks can be unresponsive. It's necessary to approach a modification like any other real estate transaction such as a purchase or sale.

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Wrongfully Denied A Home Loan Modification

loan modification, hamp, new jersey, lawyerAfter her husband died in 2009, Paula, of Atlantic County, New Jersey, needed to obtain a loan modification because she could no longer afford the high monthly payments. HAMP had just come out that year, and she remembered hearing about it on the news.

She found the loan modification application on Bank of America’s website, and sent in the filled-out application and the appropriate documentation that they requested.

The bank told her that she was missing paystubs, her husband’s death certificate, and bank statements, all of which she had sent in. She called them and went on hold for hours, and was transferred back and forth between departments, until they dropped her call, and she didn’t get any of the answers she was looking for as to why they lost her documents.

As they requested, having no other choice, unless she wanted to sit on hold for three more hours, she resubmitted the documentation.

Six months past, and Bank Of America finally sent her a letter in the mail- she was denied for a loan modification because she was “lacking the necessary documentation”; and her loan was in default.

 

This is a very common occurrence, we see this all of the time; banks continually lose homeowners’ documents causing many more months of delay than are necessary. To read more about the corruption of banks/loan servicers, click here.

 

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Dual Tracked By The Bank

dual tracked, new jersey, lawyer, hamp, loan modification Ross, of Salem County, New Jersey moved into a home with his wife Jackie in 2005 when they were able to get a loan with an interest rate that was the lowest they had ever heard of. Ross worked full time at a local plastic factory making minimum wage.

In June 2009, Ross lost his job and he and his wife couldn’t keep up with the monthly mortgage payments. Plus, a month earlier, his interest rate shot up, making it even more difficult to make the payments. They defaulted on their loan.

Ross called his lender, Wells Fargo to see about refinancing or obtaining a loan modification.

He sat on hold for over an hour before a representative took two seconds to tell him to find the application online then hung up on him.

Ross sent in the application for a loan modification a week later.

Two months went by before Ross and Jackie heard back from Wells Fargo. But, with good news- they qualified for a loan modification. In the following weeks Ross and the representative went over the loan modification agreement.

But, shortly thereafter, Ross got notice of a sheriff sale, and the bank rescinded their loan mod agreement.

The bank had dual tracked him. While one department was working out the loan modification agreement, another was beginning the foreclosure process. He ignored all of the foreclosure notices because he had believed a loan modification was already in order. Once the sheriff sale was scheduled, the loan modification department could no longer proceed with their file.

They told Ross and Jackie that since the loan mod was revoked, their only option was to pay a lump sum to catch up on all of their missed payments and fees. If they didn’t catch up on all of the missed payments all at once and pay the fees, their home would be sold at a sheriff sale.

Ross and Jackie didn’t have the money to do so.

Their home was sold at the sheriff sale and they were evicted.

 

To read more about the corrupt practices of banks/loan servicers, click here. 

 

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The Future of Foreclosure

The Future Of Foforeclosure, new jersey, lawyerreclosure In the United States

The truth is, the foreclosure crisis is not over.

The end of the Great Recession, on the books recorded as June 2009, seems to be a premature end-date for those still feeling first-hand the financial backlash of the economic downturn.

Homeowners suffered significantly during the Great Recession; foreclosure rates skyrocketed, many of which compared to the foreclosure rates during the Great Depression (to read more about this, click here); and it has become evident over the years that things are going to take a long time to return back to normal.

While foreclosure rates have decreased since their acme during the Great Recession, they still remain over three times their normal levels (as David Dayen noted). Further, those whose loans exceed the value of the home- known as being underwater, continue to make up an enormous amount of homeowners; their number exceeded 8.7 million in 2015.

RealtyTrac found that for the first time in 3 years, foreclosure auctions were increasing, along with foreclosure filings. The signs spell out trouble- but the government and polls continue to say that we are out of the recession and that things are looking up.

The Problem Began Before The Recession Hit

The way that mortgages were handled changed significantly during the housing bubble. Many brokers sold too-good-to-be-true mortgages during the housing bubble to people who normally wouldn’t qualify: they preyed on people with low wages, people of Latin American decent, African Americans, those who were immigrants, working-class people making minimum wage. Interest rates were often incredibly low, and adjustable rate mortgages with initially low teaser rates were common; but many of these rates will be resetting to higher ones, rates which many homeowners will not be able to afford. Some economists believe another foreclosure spike is imminent.

Everyone is working against the homeowner.

Although many homeowners will have the desire to save their homes from foreclosure, it is evident that the financial institution may be working against them. Because of increases in the price of real estate, those whose homes are in foreclosure face the possibility of the bank seizing their home; it is now more financially favorable for the banks to just seize and sell your home, rather than helping you through the foreclosure process. This practice is seen going on all over the country. Banks want to settle the mortgages and foreclosures once and for all, and their way of handling this is by driving the homeowner into eviction.

To make matters worse, the loan servicers, those in charge of approving and denying homeowners for loan modifications in order to avoid foreclosure, continue to make it nearly impossible to obtain a modification. (To read more details about the corruption of loan servicers, click here). Many servicers continue to deny homeowners for no reason, despite the fact that they may qualify, and mishandling the documentation that borrowers send in, and neglecting to carry through with loan modification agreements that were reached with the homeowner.

Maybe most aggravating, is the fact that there are no laws governing their actions, and no penalties to face for committing such shameful wrongdoings to the homeowners.

What’s To Come?

It is likely that those dealing with mortgages from the time during the housing bubble will continue to suffer down the road.

National recovery has been slow, and even slower in those areas that received the greatest blows; which is inherent in the nature of the beast– subprime lenders targeted people in areas that were very poor to begin with, so when the recession hit, the people struggled to a greater extent than those living in wealthier areas.

It is unfortunate that those who suffered the greatest in the Great Recession are being helped the least, and that no one wants to step up to the plate and take the blame. Taking the blame may actually require them to try and fix the problem, instead of just pointing fingers. And who in government or from the banks wants to do that? It’s much easier to sit idly by while people continue to struggle.

 

 

 

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HAMP: The Obama Administration and The Banks’ Love Child

HAMP
Timothy Geithner, U.S. Secretary of The Treasury under the Obama Administration

HAMP: The Obama Administration and The Banks’ Love Child

When the economy was hit hard, the people turned to their government for help.

Economists stated that during the period from  2007 to 2009, the bottom 90% of Americans experienced the loss of one-third of their wealth, most of which was concentrated in their homes. After the housing market collapsed, millions of Americans were hurt deeply, and looking for financial healing. They turned to their government for help.

Cram Down: A Policy For the People

The government had a couple of solution plans drawn up to try to help those who were hit hardest by the recession: homeowners. The first of which, largely supported by Obama during his campaign for the presidential election, was “cram down.” Cram down gets its name from the action that the bankruptcy judge may take in reducing or eliminating debts that a borrower cannot pay; it is a common practice in bankruptcy court. In the context of foreclosure, it would force down the value of the debt to the value of the home; the logic of this being, the bankruptcy judge can write-off or reduce the debts that the homeowner cannot pay off– allowing an underwater homeowner to keep their home when they normally wouldn’t be able to.

HAMP: A Protection Plan For Financial Institutions

A number of legislators and citizens alike supported cram down as a way to remedy the foreclosure crisis. It was a plan for the people, and in the homeowner’s best interest. But, ultimately, nothing was done to get it passed. Obama dropped the idea in favor of a different policy, the Home Affordable Modification Program (HAMP).

While cram down was a plan for the people, HAMP was a protection plan for the financial institutions. HAMP was born out of negotiations between Obama’s economic team and the financial industry. Notice how I said the financial industry;  homeowners were nowhere in sight, their interests and needs were not heard. But, what rang through loud and clear in these discussions were the wants and needs of the banks.

All Of The Power In The Hands Of The Banks and Loan Servicers

HAMP granted all of the power to the financial institutions. Mortgage companies were offered small incentives to modify loans for borrowers who were susceptible to going into foreclosure. But, at the end of the day, it was the mortgage companies who decided whose loans to modify (not the bankruptcy judges who were arguably much less partial in the situation). As it turns out, it was not in the mortgage companies’ best financial interest, to modify homeowners’ loans. These companies were able to increase their revenue if they kept homeowners in limbo, and eventually allowed the loans to default and proceed through to foreclosure and the eventual auction of the home. This practice allowed them to keep collecting payments and charging the homeowners various other fees, while on the outside giving the appearance of helping them.

To read more about the scandalous activities of loan servicers and the corruption that went on behind the scenes, read: ( Loan Servicers: The Face Of Corruption).

And to compound the issue of it not being in loan servicers’ best interest to give loan modifications, the problem was only worsened by the strict protocol that the mortgage companies only approve of borrowers they deemed deserving. The Treasury Department, who pulled the strings of their puppets, the banks/servicers, made it very clear that the loan services must only reward those who were “deserving” of loan modifications (known as a “hardship”).

HAMP: A Band-Aid For The Financial Crisis, Not A Real Solution

To the government, HAMP was merely a band-aid for the financial crisis; for a short period of time, it retarded the progression of foreclosures. And to the added benefit of The Treasury and financial institution as a whole, it gave banks the power of controlling the timing of foreclosures, so that millions of homes were not foreclosed upon at the same time, allowing them to absorb their inevitable losses at a slower rate. To them, even though there was chaos, at least it was controlled.

Journalist, David Dayen, stated that in a period of 5 years from the time that the policy was put into place, it only helped one-tenth of at-risk homeowners avoid foreclosure; at a time when over 10 million were at risk of losing their homes to foreclosure (to read more from Dayen at Bill Moyer’s site, click here).

Today, the red tape and corruption still lingers. Homeowners continue to struggle obtaining loan modifications, being bounced around to different departments, constantly sending in the same documentation and still getting denied even when they qualify. HAMP, the solution designed to help homeowners continues to plague them. This especially holds true to those still dealing with old loans from the time Pre-Recession, many of which continue to be problematic 8 years later. It can still be exceedingly difficult to get a loan modification, many loan servicers continue to make it extraordinarily difficult.

From the time of its conception, the solution that the government and financial organization came up with was never to benefit individual homeowners; it was a scapegoat when the alternative cram down policy would’ve caused too much financial loss for the banks.

But, who looks out for the middle class then? Those who suffered the greatest financial hardship when the recession hit?

 

 

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Loan Servicers: The Face of Corruption

HAMPLoan Servicers: The Face of Corruption

A Glance at HAMP

The Home Affordable Modification Program, HAMP, was a policy that went into effect during Obama’s presidency. As the administration and financial institutions ( its creators) would proclaim, it was designed to relieve the foreclosure crisis. But, what most won’t tell you, is that there was a great deal of corruption going on behind the scenes – all of which greatly hurt homeowners, and explains why despite Obama’s promises that 3 to 4 million people would receive loan modifications, that number struggled to creep above one million, even 5 years after the policy was adopted.

HAMP was created to give incentives to mortgage companies to modify loans of homeowners who were at risk of going into foreclosure; further it gave all of the power to these mortgage companies to approve or deny homeowners for modifications.

How Your Loan Servicer Became God Almighty When HAMP Was Adopted

In order to grasp just how much power your loan servicer was given when the government passed the bill for HAMP, one must realize that mortgages are not handled by their lenders.

During the housing bubble, many home loans were sold to middle-men, packaged into securities, then sold to bond investors. Banks hired loan servicers to: collect mortgage payments, provide customer care to borrowers (the homeowners) and to dole out the earnings to investors.

The loan servicers handled everything. So, surely, it made sense to give them the added power of approving and denying homeowners for loan modifications when HAMP was contrived. Right?

All of the power was put into the hands of a small group of people. Loan servicers played a pivotal role in the success/ failure of HAMP.

With great power comes great responsibility.

HAMP granted loan servicers with an inordinate amount of responsibility in handling the foreclosure crisis. Typically, the best way to save a home from going into foreclosure is through attaining a loan modification. Thus, the loan servicers had all of the power in controlling the rate of home foreclosures because they were the ones who dictated approving or denying people for loan modifications, on top of a plethora of other responsibilities.  The loan servicers were incredibly ill-equipped to deal with the volume of work that was laid on their laps. They were flooded with millions of individual requests for modifications. But, most companies were understaffed, and the employees they did have were not adept at handling loan modification approval. The only way they could keep their heads above water was by slashing customer care. Even if they wanted to provide customer service, they didn’t have the manpower to do so.

The Servicers Learned How To Profit

Overwhelmed with work, and with little profit to be made doing things by the books, the loan servicers manipulated the system and found a way to make HAMP work for them.

They would intentionally “lose” paperwork that the homeowners were sending into them, as to extend the time the loan was in default. (Click here to read about Paula, whose bank lost her husband’s death certificate, paystubs and more)

They stretched out the period of time for the trial modifications. This enabled the servicers to continue collecting payments and late fees, typically while proceeding through the foreclosure process, unbeknownst to the borrower. This sneaky maneuver allowed the services to then deny the homeowner of a loan modification, and additionally require the borrow to pay back payments, missed interest, and late fees; if they didn’t comply to these stipulations, the servicer could dangle the risk of foreclosure over the homeowner’s head. (Click Here to read about Ross, whose bank agreed to a loan mod, then foreclosed on his home)

Bank Of America Scam

Bank of America’s mortgage servicing team brought to light the wrongdoings of their department in a class-action lawsuit. Employees testified that Bank Of America instructed them to lie to customers, purposefully throw-out documents sent by the borrowers, and deny homeowners for modifications for no reason whatsoever without providing any explanation to the borrower.

Bank of America took it one step further by rewarding subservient employees with bonuses.

The corruption was far-reaching, Bank of America is just one of the many banking institutions who engaged in such despicable behavior.

No matter what they did, the homeowners couldn’t win.

Little to their knowledge, no matter how hard the homeowners tried to save their homes from foreclosure, the loan servicers made it impossible. All of the people whom the homeowners believed to be helping them, were in fact working against them.

The scenario recycled itself over and over again: the borrower begins making payments, gets denied for a loan modification, the home goes into a foreclosure that could have been avoided.

In a report from the Government Accountability Office about 2 years ago, 64% of all loan modification applications were denied. It continues to be a problem today because no one is willing to take accountability, and, no one is being punished for their actions, even the loan servicers who caused much of this catastrophe are not held at fault for their actions– there are no laws governing bad behavior like this.

Much of the corruption that was going on behind the curtains of the foreclosure crisis caused for a whirlwind of financial ramifications which the middle class bore the burden of, and continues to bear today. No one wants to step up to the plate and take the blame for this corruption; so many people’s hands are dirty in this situation, and its the middle class who is suffering through the wrongdoings of those they trusted.

It’s highly likely that you may have experienced first-hand the corruption of loan servicers; but that is no reason to give up; there are still options out there to save your home.