Mortgage modification program crippled by lenders

Having worked with people who applied for mortgage modifications under the president’s HAMP program (Home Affordable Modification Program) I am very critical of the actions of the lenders.  Their demands for paperwork and their constant losing of that paperwork, made me think they really did not want to modify any mortgages. They would prefer to foreclose, even when that meant big losses.

Now the Wall Street Journal has reviewed applications to the program and created a picture of the reasons for its failure.  The headline:  “Only 1 in 4 Got Mortgage Relief.”  Of 2.7 million people who applied under HAMP, only 680,000 have received permanent loan modifications.   More than a million of the applicants were rejected because of paperwork problems, either in the original application process or during the trial modification period.

As the Journal story puts it, they were “…rejected because they didn’t submit the necessary paperwork, or it was lost by their mortgage company.”  The lender service organizations — the mortgage companies — are always asking for more paperwork and often losing it when it is sent.  It’s a disaster.

However, if your mortgage payment exceeds 31% of your income you should qualify for a mortgage modification, and there is a network of free counseling organizations that will help you get one.    A list of local counselors is available from HUD .  You can also get names of approved  counseling organizations from the Hope website or by calling the HOPE HOTLINE at 888-995-4673.  You can also call 1-877-894-HOME (1-877-894-4663).  The Neighborhood Assistance Corporation does this work too.

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