Long waits, denials plague efforts to modify mortgage

[n2doc]

Program aimed at helping leaves some worse off in the end
BY GRETA GUEST
FREE PRESS BUSINESS WRITER

The federal government's loan modification program, intended to help people save their homes by lowering payments, remains mired in long waits, denials of permanent modifications and shockingly large bills at the end of failed trial modifications.

One homeowner owed more than $21,000 after his lender denied him a permanent modification, even though his income was the same as when it approved a temporary modification.

"They string me along for nine months. These are nine months I'm getting further behind," said Patrick Dinunzio, 61, of Romeo.

In Michigan, 30,625 loan modifications were completed in April, down 9% from March. There are roughly 90,727 Michigan homeowners eligible for loan modification, according to Free Press calculations.

"Our focus now is on improving the homeowner experience and holding servicers accountable for their performance," Phyllis Caldwell, chief of the U.S. Treasury Department's Homeownership Preservation Office, said last week. By July, the eight largest loan servicers will need to report more information to the government, including homeowner experience.

"The story is always the same," said Adam Taub, a consumer attorney based in Southfield. "They are stringing people along by telling them not to make payments or having them make reduced payments and then denying the home loan mod. Then people are even closer to foreclosure."

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[sandnsea]

1. That's what they're doing to my daughter

And then they want to dump that $20,000+ on top of her already upside down mortgage. It's realy infuriating. I think I'll try to reach that Phyllis Caldwell's office this week.

[FarCenter]

2. A large proportion of modified mortgages re-default within a year

Besides which it may turn a purchase money mortgage that the borrower can walk away from into a re-fi mortgage that is now a personal obligation that the borrower only gets discharged via bankruptcy.

[Riley18]

5. That would be a bad deal all around. It is looking more and more like it is best

to let the banks have the worthless homes. I know mine is at least $100,000 underwater.

[Codeine]

3. Never refi a mortgage that you can walk away from.

In many states you can walk away from an original mortgage without the lender coming after you for any remaining amount due afetr they sell the home. In a refi you become responsible for the difference.

[Riley18]

4. The banks are doing this to every person who qualifies for HAMP. The idea

that people could keep their home if they could pay 31% of their income was a good one, but like most government plans lately, it fell by the wayside when it came to actually implementing the plan. Families never got the modified mortgage so I really don't get how we know what modified plans worked and what ones failed. There really has not been enough people helped with this plan to know whether it works or not because it never got off the ground.