Since the release of the Home Affordable Modification Program (HAMP), results for permanent modifications are dismal and several lawsuits have been filed against mortgage loan servicers participating in the program. Many of the lawsuits are alleging that servicers are not meeting their obligations and acting unfairly. Obama's Home Affordable Modification Program was designed to help homeowners struggling to avoid foreclosure by modifying their mortgage loans to 31% of their gross income so mortgage payments are affordable for borrowers and sustainable over the term of the loan.
What's Happening
The homeowner is given a 3 month trial mod, and supposedly if they make all their trial mod payments on time they will get their loan permanently modified. Unfortunately for many, this is not the case. So what's the solution for these homeowners facing foreclosure after doing everything their lenders? Sue your lender for breech of contract, unfair business practices, mortgage fraud or predatory lending if you can afford litigation fees.
The HAMP program was developed to provide consistent loan modification guidelines for participating banks, and to provide incentives for borrowers, servicers, and investors to participate as well. To be eligible for a Home Affordable Modification Program (HAMP) loan modification, a homeowner must, in addition to meeting certain financial criteria, be delinquent on their mortgage payments or facing imminent default. We know for certain Bank of America has changed their imminent default guidelines mid stream leaving thousands of homeowners who had hope, hopeless. Never the less, once approved, the borrower must complete a three-month trial period to demonstrate that they can meet their modified monthly loan payment. The borrower must also submit certain financial documentation before the modification becomes permanent.
Trial Loan Modifications Not Becoming Permanent
As of March 2010, less than 25 percent of trial modifications have made it to permanent status. Horror stories of lost documents, unanswered calls, false statements, wrongful foreclosures and unfair business practices by participating lenders seem common these days as many homeowners made trial payments only to find themselves closer to being foreclosed on. The sad truth is that these homeowners we filled with hope and promise by the Government and their lenders only to be left frustrated with the the whole process.
Recent Claims Against Mortgage Loan Servicers
Recent lawsuits filed against HAMP loan servicers allege breach of contract and other claims, including claims that the mortgage servicers failed to modify home loans and perform their obligations under HAMP program guidelines. For example, a class action was brought against Bank of America alleging that borrowers were informed, erroneously, that they have to be in default before being eligible for a Making Home Affordable loan modification. The complaint alleged that Bank of America had an incentive not to modify these mortgage loans, because modification might cause it to repurchase more loans, collect lower servicing fees, or assess lower default charges on its financial statements because fewer payments would be deemed late.
As bankruptcy attorneys offering foreclosure defense we really see it all. Most of our clients come to us after failed attempts at getting their loan modified even after making 6 trial modification payments on time. Many feel they have been victims of a failed system and lied to from their lender. I mean let's be honest, times are tough for most of these homeowners and they have been told to work directly with their lenders and not to hire an attorney. Only to find themselves at the end of their rope when they did everything they were asked by their servicer. If you feel you have been treated unfairly while trying to work with your lender and have a foreclosure or sale date hanging over your head please call the Law Offices of Zhou & Chini at (800) 972-9600 or visit us online at www.ZhouChiniLaw.com
