HAMP Loan Modification Scheme Exposed

by Deme from Bellwood, IL

Ask Kate about mortgage banks that scheme to avoid approving qualified homeowners for a loan modification: When lenders participate in HAMP as a means to foreclose on struggling homeowners, they'd be wise to watch out for whistle blowers in their midst! This flagrant Bank of America practice of going through the motions with no intent to modify mortgages became public as of June 2013! When you read Deme's experience, you'll understand why I say, Buyer Beware!

Deme asks Kate about Predatory Lending

Dear Kate,

I've been attempting to get a loan modification since 2009. I was first put on a 3-month trial modification that only reduced my payments by $36.

On top of that, after the trial period, Bank of America charged me fees that I was totally unaware of.

In response, I contacted the BBB and had those charges reversed. However, in December 2009, they denied my modification and in January, 2010 I became unemployed. When I called and asked about the modification, the reason for being denied was that I was still current on by mortgage.

So, when I became unemployed in January 2010, I was still able to make my mortgage payments but was still requesting a modification.

However, at the end of 2010, I was denied again. This time it was based on lack of income, although I was making my payments. It is now 2013 and I haven't made a payment since December 2011.

I was served with foreclosure papers in April 2012 and just had a court appearance where I was told my case was no longer in case management.

I asked the case manager to explain and he told me, that means you'll have to work directly with the bank and it also gives them an opportunity to proceed with a foreclosure.

My question is... Do I have any recourse, since I know I've been a victim of predatory lending?

Also, I have a sub-prime negative amortization loan. I thought these were being phased out and that was the whole purpose of the 'bank' bail-out?

I'd appreciate whatever answers you can give. Thanks!

Kate Answers: HAMP Loan Modification Scheme Exposed at Major Bank

Dear Deme,

The government puts pressure on the lenders to offer some type of homeowner mediation before proceeding to foreclosure.

So by participating in HAMP, lenders can make it appear they are busy at work trying to save homes.

But as you may know, banks are understaffed, paperwork is lost, phone calls aren't returned, and review periods drag on forever. Then the fiasco is blamed on the homeowner, making lenders free to proceed to foreclosure without so much government scrutiny.

But hey! In the meanwhile, they are squeezing out trial payments from homeowners. In some cases they've even extended the 3-month period up to a year before denying the request for modification.

Whistle Blowers at Bank of America Speak Out

Whistle blowers at Bank of America have now confirmed that they were instructed to lie and lose paperwork so that they could deny HAMP loan modifications to qualified homeowners.

As appalling as robo-signing, employees claim they were rewarded with gift certificates if they denied enough modification transactions or had their job status threatened for failing to meet a quota.

Will this alleged fraud result in another settlement agreement? In June of 2013, Bank of America employee statements were filed in federal court as part of a multi-state class action suit on behalf of affected homeowners. This action consolidates 29 individual suits against the bank.

Who knows if it will turn into another three ring circus like the National Mortgage Settlement and Independent Foreclosure Review Agreements. For now, I will watch as this suit unfolds and give updates at my mortgage blog.

Nothing can make up for the trauma of foreclosure. The track record of compensating borrowers for illegal robo-signing has been spotty at best. That being said, a check to qualified homeowners who were fraudulently denied a modification would be better than nothing.

Negative Amortization Loan

You also asked if the negative amortization loan is being phased out. I may sound a bit jaded but I strongly doubt that lenders have any intention of phasing out the pay-option ARM as long as it's bringing in money.

Read another homeowner's related question at Is HAMP a Negative Amortization Mortgage.

Good luck and best wishes,

Ask Kate about Your Mortgage

Anyone can ask Kate a question or add a comment. (To comment, look for the link at the bottom of this page.)

Have You Seen Recent Ask Kate Answers

• Underwater 1st and 2nd Mortgage Refinancing
• Best Mortgage Modification Strategies
• Deciding When to Refinance a Mortgage
• Elusive Mortgage Rate Lock Guarantee
• HARP Refinance vs Forced into Loan Modification
• HAMP Loan Modification and Your Credit Status After Divorce

Tell a Friend

My goal is to empower homeowners! Please share HAMP Loan Modification Scheme Exposed at Major Bank with your friends!

Name:

Email: