Q: I have had two different trial payments with my lender, and I have paid as expected. But when it comes to making it permanent there is always some silly reason why they can’t. Who can I write to for help? Thanks for your good work.
A: Very few people are getting permanent loan modifications. In fact, of the millions of people who have fallen behind on their mortgage payments, or are making them under severe financial stress, just 87,000 were given a permanent loan modification in March, according to data recently released by HOPE for Homeowners, a non-profit association that assists homeowners in applying for loan modifications.
Over the past few months, it’s become clear to me that fewer people are applying for loan modifications. Some economists claim that this is because the economy is improving, and people have found jobs that are helping pay the mortgage.
As the economy moves further into a weak recovery, that’s probably true. I also believe that word has gotten around about how few homeowners have received permanent loan modifications, and have stopped trying to get one. Others have complained about the process and word has gotten out that it might not be worth even trying to get a loan modification from a lender.
The biggest problem is that lenders were not required to help homeowners during the worst downturn since the great depression. The program was entirely voluntary.
Worse, loan servicers and investors’ financial interests were not necessarily aligned. Throw in some really mediocre (if not poor) customer service from the big banks with thousands of lost documents (which I’m sure would fill a landfill if they ever turn up), and you begin to get an idea of why silly (and sometimes strange) reasons derail legitimate loan modification applications.
The simple, if unwelcome, truth is that not every homeowner is entitled to a loan modification. Some might argue that no one is entitled to a loan modification and the loan modification is totally at the discretion of the lender. However, if you feel you have been unfairly denied, you can file a complaint with the OCC, which regulates the big banks at HelpWithMyBank.gov.
You might also want to check out the nearly 30 posts I have written over the past 18 months about the loan modification process called “Loan Modification Hell” at www.moneywatch.com and glean extra help from the thousands of comments left by others in the same shoes.
Good luck. Let me know what happens.