The Catch 22 for Homeowners Trying to do Their Own Home Loan Modifications
When The Homeowner Affordability and Stability Plan was announced in late February, one of the big sound bites of the moment was President Obama’s “If you must pay, then walk away” comment in reference to paying fees up front to get a loan modification completed. With the much slower than anticipated rollout of the plan, the President might be reconsidering those words and, while he’s at it, the way the plan was rolled out.
One of the reasons that the program has stumbled out of the gate is the confusion surrounding the program and its guidelines. The appearance now is that there was an urgency to be “Doing Something” about the meltdown so getting the plan out to the public and into the media with splashy announcements took priority over educating the public and the institutions about the details and contingences of the plan. The style over substance decision and follow up after the announcement left homeowners, lenders, and services to their own devices in terms of learning about and integrating the guidelines of the plan. The resulting crush after the announcement swamped lenders and servicers with both applications and requests for information on how the plan worked. The plan had set an initial objective of helping four million struggling homeowners with their mortgages and it seemed like all of them, left to figure it out on their own, were calling at once. Under-staffed from the beginning, the lenders are still digging out and trying to catch up.
Another mistake made by the administration was its naïve positioning that homeowners could modify their mortgages on their own. These were the same people that didn’t understand the terms of their stated income, negative amortization loans in the first place. How the administration figured that they could suddenly negotiate the fine print of their own mortgages is beyond reason.
From the beginning, so much was underestimated that the quagmire now being experienced by anyone involved in a home loan modification process is totally understandable. One of the big underestimations was the complexity of the loans that were blowing up. Emboldened by their President to do it yourself, the first inclination of homeowners that had no idea where to start was to call their lender for directions on what do. In a parade of the “blind leading the blind”, untrained customer service call centers were inundated with questions ranging from simple to specific, complicated, and above the pay scale.
Hearing the stories and seeing the numbers, the administration has started to express its frustration that more home loan modifications aren’t getting done but at least some of the blame rests at the feet of these same politicians. Had they not rushed out a new program intended on helping millions of desperate people facing foreclosure, the plan could have been rolled out in a fashion that provided education up front instead grand announcements and sound bites.
What homeowners were learning on their own was that trying to do a loan modification without representation is a grinding, repetitive, and frustrating process where any sense of urgency on the lenders’ side was completely absent. Also absent was any form of help beyond being directed to the right department at the lender, often after being on hold with the wrong department for an hour. In another mis-calculation the process was represented to home owners as a simple process that required some documents, a couple of phone calls, and presto, a modified loan. Forgotten in the you can do it encouragements were the realities of home loan modifications; multiple submissions of hundreds of pages of documents after the previous ones were lost, hours on hold attempting to follow up with the lender, disqualification due to trivial mistakes, processor turnover, and a multiple of other “pull your hair out” experiences that require full time attention to getting a modification completed. It seems that unless the do it yourself borrower is unemployed he or she won’t have the time or the will to see a modification through to a successful finish. And there’s your “catch 22”; only by being unemployed can the borrower see the modification through to its finish, but being unemployed means the borrower won’t have the income to make the payment on the modified loan and, as a result won’t get approved for the modification.
Here’s where the homeowner is playing with dynamite. With as long as a loan modification takes, unless the homeowner has been making payments during the process, foreclosure could loom shortly thereafter if the modification isn’t approved or is disqualified. It’s a big risk to take in order to save a few thousand bucks.
The sophistication required to get optimal results in a home loan modification calls for negotiating experience and familiarity with the convolutions of the mortgage document. Optimal results also require consideration of the borrower’s complete financial picture in order to make modifications that will result in sustainable payments over the long term. The Feldman Law Center, having negotiated over 600 home loan modifications on behalf of their clients, has the experience and knowledge to deliver superior results tailored to a homeowner’s specific needs. Call them today at (800) 527 8497.
The administration has started to express its frustration that more home loan modifications aren’t getting done but at least some of the blame rests at the feet of these same politicians. Had they not rushed out a new program intended on helping millions of people facing foreclosure, the plan could have been rolled out in a fashion that provided education up front instead grand announcements and sound bites.
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