A distressed U.S. homeowner with a temporarily modified mortgage made every payment on time for 13 months. That’s 10 months past the standard three-month trial period, but the servicer was predicting a permanent modification, so the homeowner kept paying.
Instead, a negotiator who never spoke to the borrower rejected the permanent adjustment so the sheriff’s department put the house up for sale, no explanation given.
Another borrower spent 11 months working out and paying a reduced mortgage on a trial basis, only to learn that the servicer decided not to grant him a permanent break after all. The reason cited could have been given in the first place: the value of the property was too low.
If the homeowner had known that sooner, he would have stopped paying sooner and “not thrown away the money,” the borrower’s lawyer wrote in a letter to the servicer.
These are among complaints piling into the Troubled Asset Relief Program, which administers HAMP and other programs aimed at helping homeowners. These cases are among examples quoted in the Special Inspector General’s report to Congress last month that slammed HAMP.
About 467,000 homeowners have permanent HAMP mortgage adjustments, which last for five years. When it began in 2009, the program aimed to help 3 million to 4 million borrowers.
“A program that began with much promise now must be counted among those that risk generating public anger and mistrust,” the inspector general’s report said.
About 700,000, or roughly half, of the trial modifications were cancelled, with another 173,000 in limbo, according to the report.
You can’t explain away so many stories of borrowers following program guidelines and making payments, only to see their home still taken away. And what about complaint after complaint that no matter how often they submitted paperwork, they were told that their documents had been lost? Sounds like a stall to me.
Banks caught forging signatures on foreclosure documents and claiming ownership of mortgages that aren’t theirs like to shift attention to the deadbeat homeowner.
They promised to make payments and didn’t. They violated their contracts with lenders.
But banks, too, made certain promises. Those that took in billions of dollars in TARP funds were contractually obligated to help homeowners, participate in HAMP and follow its rules. It looks like they haven’t. •
Ann Woolner is a Bloomberg News columnist.
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