Monthly Archives: November 2009

Mortgage Modifications and Dashed Hopes

I get a lot of calls from people trying to get some kind of mortgage modification done who are confused by the process.  I tell them to get in line.  They seem to think I’m supposed to know all the answers and have a magic guidebook telling me how to force a mortgage servicer to return phone calls, act timely, tell you in advance what they will and won’t do and finally produce the result the borrower wants.

I tell them that I don’t intervene in the loan modification process.  I don’t know anymore about it than anyone else who reads the news regularly.  I have little to no faith in mortgage servicers doing anything that is not in their best interests (and they have no real interest in mortgages performing), I think most expectations about mortgage modifications (including most that I have heard come out of government officials’ mouths) are outside the contractual rights of most servicers and to call me if they get a good result —  because I would love to hear it.

Then, they start arguing with me.

Ok, finally, some real numbers.  In today’s CNNMoney article, CNN is reporting that fewer than 5% of trial modifications done on Freddie Mac loans were being converted into permanent mods.  Across the board figures are expected to be substantially lower.

I found the reasons suggested in the article to be rather different than what I hear.  People who call me after arranging a 3-month trial mod (and going through the repeated requests for the same documentation that has already been produced multiple times to multiple servicer addresses, etc.) tell me that they have a 3-month modification and they are told that they are eligible for a permanent modification; but there are two problems.  First, they have no idea what the terms for that permanent modification will be; but they are expected to sign all kinds of binding agreements.  Second, despite being current in a temporary modification and approved for some undefined permanent modification, their foreclosure is continuing to proceed.  In one case a Sheriff’s Sale was set before the temporary modification was to be completed.  Even though the people held paperwork saying that they had been approved for a permanent modification — and if they signed all the paperwork, they might someday be told what the terms of that modification would be — of course, by then they would have lost their house at Sheriff’s Sale — details, details.

I’m still waiting for my Law School alma mater to send me the magic wand that was supposed to come with my law degree.  Until then, I am going to continue to refuse any involvement with loan modifications.