Ever since the beginning of the Making Home Affordable and (HAMP) were implemented it has been thought that the rates of stop foreclosure approved by loan company would balloon and that foreclosures would gradually drop. In fact, exactly the opposite has happened. Foreclosures are occuring at a record pace while banks continue to deny folks changes on notes that should never have been approved. How did this happen and what can be done to fix it? The blame is shared by both the government and the lenders themselves.
When the MHA and HAMP programs were revealed there was widespread relief among individuals. Sure there had been panic about the rapidly falling value of homes and adjustable rate loanswere getting out of hand, but now the government had stepped in and offered a solution. What was not known at the time was that the MHA and HAMP programs were only available to those with loans under Freddie Mac or Fannie Mae. Immediately, many borrowers were turned away by their mortgage companies and simply told, “Sorry, you don’t qualify under these terms”. As a result, letters went out to governors, representatives, senators and anyone else who would listen in a position to change these programs. The response? Nothing. In its mind, Congress had done its part. There are loan modification company programs out there, people should use them.
The only problem with this is that the guidelines and subsequent red tape that ensued proved to be an almost insurmountable barrier for individual homeowners to surmount. Countless stories in blogs, interviews and news reports all tell the same tale: a homeowner contacting their servicers to try a loan modifications, being yanked around from different agents and offices and being told conflicting updates on the process, all while time ticks down on their property being foreclosed. loan company are not required to tell homeowners why their mortgages modification has been turned down, and there are few set guidelines or criteria that the government requires mortgage companies to conform to. After meeting a few basic guidelines, it is entirely up to the individual servicers on whether to approve a loan modificationsor not. All this has done is increase the confusion of the process by introducing conflicting accounts of what situations qualify for a loan modifications.
It is little known that banks receive subsidies from the government under these programs for setting a borrower in a “trial loan modification”. This is a program in which the lenders lowers the payment due on the loans while they review placing the borrower into a permanent adjustments. There is no guarantee of a permanent settlement on the debt, and yet the loan company still receives money from the government merely for thinking about helping someone.
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