Loan Aid Leaves Some Worse Off

In a May 18, 2010, article the Wall Street Journal reports how many homeowners who participated in HAMP “Obama Plan” loan modifications are worse off after the experience. The story reports that one in four participants in the program gets dropped.
Back on January 24, 2010 in the blog post titled “Is HAMP one big Scam?” this blog explained that while HAMP was conceived by the government with good intentions many banks are tricking homeowners into making additional payments under HAMP trial plans and then denying permanent modifications.

The Wall Street Journal told the story of how Mia Parry bought a home in Phoenix in 2005 for $535,000 which would sell for around $250,000. Parry first requested a modification from a unit of Citigroup Inc., the servicer of her two mortgage loans, in June 2008.

Ms. Parry's application was turned down in late 2008, but President Obama's announcement of HAMP in February 2009 rekindled her hopes. Ms. Parry decided to keep making payments on her loans because she expected to qualify for this new program.

According to the Journal Citigroup started Parry on a HAMP trial in June 2009, and she made three payments. Then Citigroup told her there had been a mistake and she would need to go through another three-month trial.

At the end of that second trial, Ms. Parry said, Citigroup told her the investor that owned her first mortgage wasn't participating in HAMP, so she couldn't get a modification under that plan. During her trial period, Citigroup charged her more than $1,300 of "late charges" and "delinquency expenses," she said.”

Clearly, Citi knew or should have known whether the “investor’ was participating in HAMP. It is just too convenient that Ms. Parry apparently does not know who the “investor” is and Citi apparently is telling her the investor apparently without naming names so that she could confirm whether the statement in accurate. An argument can be made that since Citi participates in HAMP and received billions of TARP money and emergency aid from the government to keep it afloat, Citi must participate in HAMP on those loans it services.

Any homeowner who contemplates starting a trial modification should get the first and last name of the person they communicate with and confirm their oral communications by E-mail. If a homeowner is going to make three trial payments the bank should agree that if all three payments are made on a timely basis then the modification will be made permanent. If the bank makes an oral promise to this effect the homeowner should confirm the promise by E-mail or fax. If the bank will not make this promise the homeowner should refuse to send the trial payment and obtain legal representation.

The foreclosure attorneys in the Dade, Broward, and Brevard offices of Shuster & Saben are defending many homeowners in foreclosure where lenders are servicers broke their promises of giving permanent loan modification. We have also sued banks that promised modifications, took our client's money, and broke their promises. If you have a HAMP horror story we want to hear about it. If you are a Florida homeowner that is not in a county we serve we (currently we defend foreclosures in Dade, Broward, Palm Beach, Martin, St. Lucie, Indian River, Brevard, Orange, Collier and Lee Counties) we will be happy to refer you to a talented attorney in your area.

Is HAMP one big Scam?

Yesterday, CNN published an article about Home Affordable Modification Program otherwise know as HAMP and the Obama Plan Modification. The article is titled “450,000 At Risk In Foreclosure-Prevention Program.” If you have not read the article here is a link to the story. I was suspicious of the banks participating in HAMP before the article was published. Too many times I our law firm has heard from homeowners who had stopped making mortgage payments and were contacted by their lenders about a HAMP modification. The homeowners were promised that is they made three (3) trial payments they would be approved for a HAMP loan modification that would reduce their mortgage payments. The homeowner would be told that if they made the three trial payments and submitted the requested paperwork (usually pay stubs and tax returns) they would receive a loan modification, the amount of which would be determined during the 90 day trial period. Many of the homeowners contacting our firm for help made the three trial payments only to be told that they did not qualify for a modification or that their documentation was incomplete.

After reading CNN’s article, I am beginning to feel that HAMP is just a scam perpetrated by lenders against homeowners. The statistics reported by CNN show that less than 10% of the homeowners who have participated in HAMP received a permanent modification. Specifically, CNN reports that while 787,200 homeowners are in trial modifications but only 66,500 people have received permanent adjustments.

A bank-loving lobbyist might speculate that the reason for so few modifications is a failure by the homeowners to make their three trial payments on time. Such speculation would be WRONG as the Treasury Department confirmed to CNN that three-quarters of the homeowners in trial modifications are making their three trial payments on time.

My suggestion for Florida homeowners that are not in foreclosure and are considering a HAMP modification is get everything in writing. If a homeowner who has not paid their mortgage in several months is called about HAMP, the homeowner should request written confirmation that if they make three timely trial payments they will receive a permanent modification. The amount of the permanent modification should also be provided before the first payment is made. After the first payment is made and the documents are submitted, the homeowner should call to confirm receipt of the documents and confirm that no additional documents are needed. If a bank representative orally confirms that no additional documents are needed such confirmation should be reduced to writing in the form of an E-mail or letter to bank confirming the conversation. By confirming that the lender or servicer does not need any additional documents the homeowner takes away the lender’s ability to call after receiving 3 payments and only to tell the homeowner that they must start over because one form was incomplete or missing a signature or comma.

For homeowners who already in foreclosure any loan modification should occur as part of a written settlement agreement reviewed by the homeowner’s legal counsel. Before the homeowner pays one thin dime, the homeowner must know what performance on their part will result in the dismissal of the bank’s case and the amount of interest rate and loan balance reduction they will receive in return for their resumption of monthly mortgage payments.

Homeowners who made three HAMP payments and did not receive a permanent modification should consult a licensed attorney to evaluate if the homeowner has a claim for either fraudulent inducement or breach of contract. Our firm is litigating against Litton and Bank of America for breaching a loan modification agreement. Homeowners with further questions about this issue my inquire by e-mail to foreclosuredefenselaw@gmail.com