| Government Loan Modification SNAFU |
| By Credit Federal |
Published
07/20/2009
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Home Loan
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Complaints About the Government Loan Modification Program
Some homeowners who have been seeking help from Obama's Loan Modification Plan, have been complaining about their phone calls not being returned, paperwork being lost, and decisions being delayed. Though this may not be the case with every Servicer who is participating in this program, there appears to be a serious problem.
Qualifications for the government loan modification program can also be quite confusing. Second liens from banks did hinder the modification process, but in April that problem was resolved. Servicers must modify or extinguish second liens if they adjust the first. Borrowers who have financed up to 125% of their property's value can now participate, but they still must meet a certain criteria. The program allows homeowners to refinance at lower interest rates even if they have little or no equity in their home.
It is estimated that one in every 80 homeowners have filed for the modification plan since the beginning of the year until June. Borrowers started complaining about the process when the program began in April and May. There are also complaints about servicers being under staffed and under trained.
The hope is that the program will help some nine million homeowners by 2010, but homeowners need to know about the program. Servicers are being encouraged to make contact with borrowers and let them know about the program. The administration is prompting banks to do more outreach and educational events.
Lawmakers have not been happy with servicers regarding complaints that borrowers and consumer advocates have brought forth. Some Mortgage executives have defended their role of helping troubled homeowners through the program.
It has been reported that Bank of America responds to about 80,000 calls a day and have funded some 40,000 refinance applications. They also have more than 7,000 people handling home retention which is twice the number a year ago.
The Administration has set aside 75 billion dollars for loan modifications. There will be a meeting on July 28, 2009 for the Treasury Department, housing officials, and Financial Executives to meet about how the program has been implemented.
The Administration appears to be aware of the problems troubled homeowners are experiencing and are striving to correct issues. So far over 40,000 refinance loans have taken place under the program for consumers who little to no equity in their homes.
On August 4, 2009, the efforts of Servicers who are participating will be made public and there are plans to issue reports each month regarding progress. Servicers so far have done over 300,000 loan modifications. Officials want servicers to send letters, hire more workers, and expand call centers to promote the program so that it can be a success.
Eligible borrowers who are at risk of defaulting, may be able to lower payments to no more than 31% of their pre-tax income with loan modification. The modification becomes permanent once the borrower makes 3 on-time payments.If you are a troubled homeowner who is at risk of loosing a home, contact your bank or mortgage holder for information.
Review other articles (below) about how government regulation of the credit industry is limiting the availability of credit to poor and bad credit people. Then contact your legislatures and demand that democrats discontinue big government interference with free-trade in the credit industry.
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