Posts Tagged ‘trial plan’

Bank Of America Lagging Behind In HAMP Modifications

Recent data released by the government reveal that Bank of America, for all its touting as a loan modification leader,  is the least responsive to beleaguered homeowners in need of mortgage assistance.

The numbers show that Bank of America has offered only 24% of homeowners whose HAMP modifications were cancelled alternative modifications while the big eight servicers have offered 44.5 % of this group alternative modifications. Further, where trial modifications have been denied, the big eight have offered 33% of these folks alternative modifications while Bank of America has offered only 11% of this group alternative modifications.

As for HAMP modifications, fifty percent of Bank of America’s trial modifications are still ongoing after six months even though the government specifically has ordered the banks to either convert the trials to permanent modifications or cancel them in three months. Only 26% of all Bank of America’s trial modifications have been converted to permanent ones.

Bank of America talks a good game and releases its own figures just prior to the time when the government releases its numbers. While Bank of America does have the greatest number of permanent modifications, this figure is misleading since it has the largest number of eligible loans out of any other servicer.

HAMP Still Not Making The Grade: Geithner Refuses To Consider Alternatives

By almost every measure, the HAMP program continues to underperform in its effort to address the problem of mortgage foreclosures. Since its inception a year and half ago, only 340,000 homeowners have received permanent modifications and 436,000 have been dropped from the program. Last month alone, 155,000 homeowners were kicked out of trial modifications as opposed to only 30,000 who received new trial modifications. Accordingly, it appears the HAMP program is helping fewer and fewer homeowners as time goes on.

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New Class Action Suits Could Create Precedent To Enforce HAMP Modification Agreements

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By most measures, the Making Home Affordable Modification Program has had lackluster results in permanently averting foreclosures and dampening the effects of the foreclosure crisis. The main reason HAMP has been so ineffective is the fact that at its core, it remains a voluntary program on the part of mortgage loan servicers and lenders. In other words, HAMP has no teeth.  Servicers may choose to participate or not and even if they choose to participate,  nothing in the program language states that they must modify any loans.

Therefore, we have a situation where homeowners enter into trial modification agreements and comply with each and every condition of the agreement, only to have the servicer delay responding or continue to ask for more documents. All the while, the homeowner continues to make his or her trial payments. Worse, it is all too common for the borrower’s home to be foreclosed upon while the trial modification is pending, even though HAMP prohibits any foreclosure sale while the borrower is in a trial period plan.

Four class action suits, filed  by the Boston based non-profit  National Consumer Law Center, in the state of Massachusetts aim to give HAMP teeth it lacks. The lawsuits  claim that the trial plan is a contract that the servicers have breached by failing to modify the loan once all conditions have been met. The complaints go even further by suggesting that the signed agreement the servicers have with the U.S. Treasury represents a contract to mitigate the foreclosure crisis by offering assistance to homeowners at risk, and that by failing to modify enough loans, the servicers have breached that contract as well.

Should a judge rule in favor of the plaintiffs in these cases, a precedent will be established that renders both the trial plan and the agreement to join the HAMP program enforceable contracts.  This would mean that servicers would be required to give permanent modifications to those homeowners who comply with the terms of the trial plan, and furthermore,  be required to actually render assistance and prevent foreclosures per the HAMP agreement.

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