The Mortgage Modification Lie

Need to modify your mortgage?
Sick of being jerked around by your mortgage company?
Think bankruptcy. (See yellow box below.)

The obvious mortgage modification scams:

The foreclosure crisis spawned a whole new kind of scam, this time worked on unsuspecting consumers who cannot afford their mortgages and who desperately want to keep their homes. Companies who claim to be able to get you a mortgage modification, but who just take your money and do nothing. Basically, it seems, it the company is based out of Florida, Texas or California, it may well be a mortgage modification scam.

You know the ones. Until recently, the tv and radio teemed with commercial promising you a mortgage modification.

Fortunately, State and Federal governments have stamped out at least most of the biggest offenders and that's why you see less commercials on tv and hear less commercials on the radio.

But...beware. New scammers will always spring up as long as there are desperate consumers.

That said, the sad truth is that there is very little in the nature of mortgage loan modifications out there to help you.

Not what you want to hear? Sorry, but I'm not going to lie to you. Wish I had great news for you, news that would guarantee you get to keep your house and keep it for an affordable mortgage payment...but I don't.

The truth is that...for the time being...the banks have learned their lesson...that loose underwriting requirements for home mortgages are a recipe for disaster. Now, in order to get a mortgage, you just about have to be in a position where you don't need one.

And it gets worse.

HAMP: The less obvious, emerging government sponsored lie.

So, along comes President Obama and the Home Affordable Modification Program (also known as "HAMP"). Sounded good on paper. Even fooled me. Supposed to help save homes for millions of Americans. It even got funding by the Treasury Department to the tune of an estimated $42.5 billion of the $50 billion in available TARP money.

The HAMP goal: to provide financial support for about 2 to 2.6 millions mortgage modifications, to save homes and drive down the number of foreclosures.

The reality: Another huge disappointment for millions of American families.

Sorry. Just thought you ought to know.

The problem is that the Home Affordable Modification Program has no teeth. It's completely voluntary. Being completely voluntary, the banks don't really have to do or modify anything.

And...as it turns out as of 9/1/09, they haven't.

Instead, being voluntary, the banks can go on doing what they do best: putting their best interest ahead of yours...like always. Business as usual...greed over need.

Under the HAMP program, you apply for a mortgage modification. Then, if approved, you are only 'approved' for a 'trial modification', not a 'permanent' modification. Being approved for a trial modification, you are given a lower "trial" mortgage payment, which they tell you, you must make on-time for 3 months.

If we stop right here, it sounds like, if you pay the trial mortgage payment on-time for 3 months, the mortgage modification is yours. That's what I thought too. Not so.

Remember, the program is entirely voluntary. The banks don't have to do anything....and they haven't. The following numbers speak volumes.

As of 9/1/09, Fannie Mae (Treasury's agent for HAMP) there were 362,348 loans 'approved' for a trial modification. Wow, that's a pretty big number, right? That sounds great, right? Sounds like the banks are really trying to be a part of the solution. Right? Wrong.

Here's the kicker. As of 9/1/09, only 1,711 loans have been turned into 'permanent' modifications.

That's not 1,711 in your town. That's not 1,711 in your County or even your State. That's 1,711 mortgage modifications actually completed in the whole, entire United States.

Think you will be the 1,718th permanent modification. Don't hold your breath waiting for your modification. It ain't gonna happen.

Think about it. 1,711 permanent mortgage modifications out of a total of 362,348 loans 'approved' for a trial modification.

Are you thinking what I am? This has scam written all over it.

So, what's the deal?

The deal is that apparently banks don't really, really want to modify mortgages. Why would that be? What's in it for them? Why do all the work of taking applications and approving trial modifications?

There are a number of likely reasons:

First off, there is more and more evidence that banks make more money just stringing you along than foreclosing on your house.

With a lower payment in hand (the trial payment), they know you will keep paying, and as long as you keep paying they get what are called "servicer fees".

You see, most mortgage are held in big trusts, trusts full of thousands, if not tens of thousands, of mortgages. These trusts are owned by investors. However, someone needs to represent the trust owners in order to "service" all the loans in the trust, to collect and account for the payments, and to pass on the money (or what's left) to the owners. In most cases, the servicers are large banks like JP Morgan Chase.

Chances are that your mortgage is held by one of these trusts.

For servicing the mortgages in a trust, these servicer banks get paid fees, lots of fees. We're talking major money here, and banks being banks, they don't want to kill off the golden goose. Allowing a mortgage modification to go through kills off some of these fees.

Second, the servicer banks don't want to get sued. You see, the servicer banks are supposed to be working for the owners of the mortgage trusts. If the servicer messes up or does something the servicer is not allowed to do (like modify a mortgage), the servicer can get sued by the trust owners. In most cases, the servicer does not have the authority to 'modify' your mortgage, and doing so could expose the servicer bank to lawsuit...a huge and expensive lawsuit.

Approving only a trial modification that the servicer bank never approves doesn't get them into trouble enough to get sued...appparently.

Can you see why the 'servicer' banks, the ones you apply to for your mortgage modification, have no incentive to modify your mortgage?

So, you say, why bother taking all those applications for mortgage modifications?

Well, I can think of a number of reasons.

One, the banks have been handed a lot of your money by the government...I mean a lot of your money. Remember the bailout. Remember TARP. Well, when you have been given a lot of money to bail you out, you have to at least make it look like you are doing something in return.

So, the banks take a lot of mortgage modification applications.

And...why not?

(1) By giving you false hope, the banks can keep you paying something on your mortgage. I mean, it's a pretty cool scam. Keep you thinking they really do intend to approve a permanent, an impression fostered by Congress and the President, and, the result, you keep paying and paying, even in the face of the mounting evidence to the contrary;

(2) To the government, it makes it at least 'look' like the banks intend to do massive numbers of mortgage modifications, even in the face of evidence that they apparently have no intention of doing so. Yeah, sooner or later, we will all catch on to the scam, but in the meantime, it looks like they're doing something to help and raking in the money they need to stay in business. Remember all those servicer fees they get;

(3) By keeping you paying something, they can put off finishing the foreclosure on your home, and that makes it look like, at least for the time being, that there are less foreclosures, making it look like the politicians are doing something to stem the foreclosure crisis;

(4) By keeping you focussed on the false hope of getting a mortgage modification, they keep you distracted from the real solution...making the hard decision to give up a home you know in your heart you really can't afford...or deciding to file bankruptcy to fully and finally get past the worst financial mess in your life, so that you and your family can get on with life.

All that aside, all you have to remember is the number 1,711.

As of 9/1/09, that was the total number of mortgage modifications completed under HAMP in the whole, entire country.

It's a joke. Unfortunately, the joke is on you and me.

So...how do you know you're being lied to?

The answer is that you are probably being lied to if you get the feeling that you are being jerked around.

Here are other warning signs:

•     Your "trial mod" just keeps getting extended...and never seems to go permanent. What's this
          mean? They're just milking you for more money...until they're ready to move on the
          foreclosure of your home.
•     Every time you call...you get a different person.
•     They never seem to be able to find your paperwork.
•     They keep saying that there is something wrong with your paperwork.
•     They tell you they have lost your paperwork.
•     They tell you, you missed some odd deadline, and that you have to submit new paperwork.
•     No matter who you talk to...your file is always in another department or on another person's
         desk.
•     They keep you waiting on the phone every time you call.
•     And THE BIG ONE: Even though "supposedly" they are working with you...they go ahead
         and start the foreclosure on your home anyway. When this happens...there should be
         huge alarms going off in your head...big loud alarms telling you that they have no
         intention of modifying your mortgage...and that... all along...they have just been stringing
         you along...making a fool out of you. Think about it. The same company that is
         "supposedly" working on your mortgage modification...has just turned the dogs loose on
         you to take your home. Wake up...you're being lied to.

Think It's All Just Happening To You...Ask The Turlingtons

Getting the run around? You are NOT alone.

See the box at the bottom of this page and find out what happened to another good, hard working family, right here in North Carolina...the Turlingtons.

So, what do you do?

First, stop trusting them and stop waiting on a mortgage modification that's never gonna happen. The evidence is in: "It ain't gonna happen". The mortgage modification promise is just a lie from the get go. Oh...I expect that they'll be a few here and there that get modified...probably just enough to keep Congress and the Treasury Department off their backs.

Second, look at other alternatives....like bankruptcy.

Bankruptcy is the real deal...and always has been.

Bankruptcy is so powerful that the banks and other creditors will do everything in their power to keep you from finding out.

If you can afford your home, but just need time to catch up on payments, a Chapter 13 bankruptcy can be the answer.

And, if you can't afford your home, bankruptcy can do 3 things for you:

(1) Buy you some more time in your home "for free",

(2) Get rid of the debt you will owe when your house sells at foreclosure for less than what you owe. You see, when a house sells for less than what is owed on it, your mortgage lender can come after you for the difference. This is called a 'mortgage deficiency'. Without bankruptcy to help you, not only will you lose your house, but you will still owe money on it. That's no fun, and

(3) In addition, as an extra bonus, filing bankruptcy can also get you out from under other debts like credit cards, unsecured personal loans, certains types of judgments, and medical bills. And, when I say "out from under", I mean for good, forwever, without having to ever pay them back. That's right. If you need to file bankruptcy, you might as well get the most out of it. God knows we all needas much help as we can get in this bad economy.

The bottom line:
If you can't pay all your debts.
Bankruptcy isn't right or wrong....it just is.

Whatever you do, there is no use just sitting there doing nothing.

Call today for a FREE Debt Consultation and at least find out how all this bankruptcy stuff works. You won't be disappointed...I guarantee it.

Call today!

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