Macomb County Michigan Short Sales: Why a Loan Modification Could be a Recipe for DisasterThe Star Tribune, a newspaper in Minneapolis, recently ran a story about loan modifications. Here is an excerpt from the article:
By: Rick Giese Thousands now face a stark choice: Go deeper into debt, or foreclosure. Lenders routinely approved short-term "trial" loan modifications that reduced payments for desperate borrowers under the umbrella of the Obama administration's Home Affordable Modification Program. But lenders continued to count the mortgages as delinquent or in default. Now instead of granting permanent modifications, lenders often are reinstating the original loan terms and demanding big back payments. Carl Christensen, a Minneapolis real estate attorney, said he is getting 15 telephone calls a week from shocked borrowers. Patti, 51, and Scott Weddle, 57, of Harris, Minn., were ecstatic when J.P. Morgan Chase offered in November 2009 to cut their monthly mortgage payments by about 20 percent under a trial modification. Patti was out of work with a neck and back injury, and the Weddles were having difficulty making ends meet. Nearly a year later, the Weddles were told that their application for a permanent modification was denied and that they would have to pay $24,228 to bring their mortgage current and avoid foreclosure. The Weddles insist the demand came as a shock, because they had made all their payments on time under the trial modification. "We did everything that was asked of us, and it only pushed us deeper in the hole," Patti Weddle said. A growing number of critics contend the loan modification program, known within the industry as HAMP, may be doing more harm than good. Many homeowners are draining their savings and incurring new loans to make the temporary payments only to end up in foreclosure anyway when they can't afford the large, lump-sum payments demanded at the end of the process. When the Weddles got turned down for permanent relief under HAMP, they decided to stop making their monthly payments. They expect to receive foreclosure papers any day and most of their belongings are packed. "If we had $24,000 lying around, then we wouldn't have sought help to begin with," Patti Weddle said. A spokesman for J.P. Morgan Chase said the risks were disclosed to the Weddles. Under the trial modification signed by the couple, J.P. Morgan reserved the right to terminate the plan at any point and begin foreclosure. The bank also reserved the right to determine the final amounts of unpaid interest and any other delinquent amounts. "We work with customers to try to keep them in the home whenever possible," said Thomas Kelly, a bank spokesman. "And the HAMP documents clearly explain the steps along the way." Paula Viehman, 60, recalls the day she was approved for a trial modification in June 2009. After a 30-minute conversation, a CitiMortgage representative agreed to cut her monthly payment by half to $929. "It was the answer to my prayers," said Viehman, a state employee who lives in Minneapolis. Fifteen months later, CitiMortgage sent two letters claiming she was in default on her mortgage and owed $13,569 in back payments, late fees and other charges. When Viehman called to complain, she learned that CitiMortgage had denied her application for permanent relief under HAMP, though the bank had never notified her. Viehman refuses to make the lump-sum payment. "The longer I go through this, the madder I get," she said. "I did everything they asked and more." Citigroup, CitiMortgage's parent company, declined to comment about Viehman's complaints because of privacy concerns. However, in a written statement, the bank said the original terms of a mortgage remain in place during a trial modification. Borrowers only receive relief from delinquent payments if they get permanent modifications. Many borrowers say they never would have signed up for HAMP had they known the risks. Lynda Devine, 49, of Faribault, said she had not even heard of HAMP until she called her mortgage servicer, Aurora Loan Services of Colorado, about a routine matter. While on hold, she found herself listening to a recorded message that said she might qualify for HAMP. She checked it out and learned it was a program sponsored by the Obama administration. "It all seemed very legit," she said. Aurora agreed to cut her monthly payment to $1,400 from $2,000 under a trial modification. But Devine, a children's mental health social worker and waitress, soon found herself mired in a bureaucratic nightmare. As she sought permanent relief, Aurora kept asking for the same documents -- including bank and tax statements. Devine estimates she has faxed documents to Aurora more than 60 times. Nonetheless, she received notice in July that she was in default. Soon after, she got a letter from Aurora's law firm saying she would have to come up with $13,496 or face foreclosure. Devine couldn't stomach the idea of losing her 1920s-era farmhouse and her 35 acres, where she keeps three beloved horses. Aurora did not return repeated calls seeking comment. Devine borrowed against her truck and horse trailer to pay the $13,496, but she's considering suing Aurora to get the money back." In fact, the article continues and tells us how the lenders are actually rewarded for not processing loan modifications. Here is what it says. "Incentives favor foreclosure. It would seem to be in a mortgage company's interest to modify a mortgage, because lenders often recover only a small fraction of a loan after a foreclosure. But only 12 percent of all delinquent mortgage borrowers are receiving permanent relief under HAMP. Last month, a congressional panel predicted it would prevent just 700,000 to 800,000 foreclosures -- far fewer than the Obama administration's original goal of 3 million to 4 million. Some lending experts argue that the root of the problem lies in the complicated way in which mortgages are bought and sold. Most end up with institutions or investment trusts that hire servicers to collect monthly payments. Servicers, unlike lenders, don't generally lose money on a foreclosure. In fact, servicers actually can collect more in fees on a foreclosure than from modifying a mortgage, according to a 2009 study by the National Consumer Law Center." I think the entire system is flawed. The only people that get relief are people that fight for it. If you feel like you have been turned down for a loan modification, then I would recommend that you protest in front of the lender's local branch. Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at rick@rickgiese.com. I will contact you for a free consultation. When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me Rick Giese at Toll Free 1-800-274-5656 Rick is a Real Estate Associate Broker atRE/MAX Advisors Macomb and Oakland County Short Sales Realtor: Phone: 1-800-274-5656. rick@rickgiese.com. Rick Giese specializes in loan modification assistance and short sales in the Macomb County Area of Michigan. Macomb Loan Modification Help, Macomb Short Sale Help. Macomb County MI our services are offering sellers another option besides pre-foreclosure foreclosure or bankruptcy that can effect their credit for years. We are currently offering our services in the Richmond, Shelby Township, Macomb Township, Chesterfield Township, New Baltimore, Clinton Township, Sterling Heights, Mount Clemens (Mt Clemens) Fraser, Harrison Township, Warren, Roseville, St Clair Shores areas of Macomb County Michigan # # # As one of Macomb Counties MI leading Short Sale experts. Rick Giese wrote this article to Help ensure that homeowners were and are being given sound advice about How to Stop and Avoid Foreclosure End
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