HAMP Loan Modifications Cause Frustration for Borrowers

If you’ve tried to get your lender to modify your loan, there’s a good chance you can relate to the people in this article from the USA Today.

Maybe you’ve called your lender multiple times with no call back.  Or maybe you’ve had to provide the same documentation over and over and over again.  Or maybe you were on of the lucky ones who actually got a loan modification…and it was for a mere fraction of your normal payment.

I’m working with a seller right now on a short sale after she tried unsuccessfully to have her loan modified.  After being asked to provide her late husband’s death certificate 3 times, she saw her monthly mortgage payment of approximately $2200 reduced by a whopping $73.  That’s right…her lender lost the death certificate and needed to receive it 3 times!  Of course, the minute payment reduction is not nearly enough to help, and so the short sale was the next step.

Unfortunately, this is typical of loan modifications under the government’s HAMP (Home Affordable Modification Program), a bailout program that “encourages” lenders to modify the loans of borrowers in default.  If you’ve read this blog before, this is not news to you…I’ve written other articles about HAMP.

But what’s really frustrating is the government’s response to the problems.  Remember, HAMP offers monetary incentives for lenders and servicers to approve loan modifications.  And so the Treasury Department says it will start handing out a type of “report card” on how services modify loans.  And if they score poorly…well, they might not be entitled to the monetary incentives.  But if these monetary incentives were so desirable to begin with, wouldn’t the servicers be modifying loans left and right?  Ahhh…government.

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