Lingering Loan Mods
I just read an article about a gentleman, whose home mortgage was restructured by JPMorgan Chase & Co. after the recession cut into his small business.
This man was grateful that his payment dropped 25% but was perplexed that his “trial” modification had never become permanent, despite his having paid the lowered amount for 13 months. It should be noted that hundreds of thousands of borrowers who had likewise received trial mods that had never been made permanent; the banks apparently say that a major problem was people failing to send back the paperwork documenting their incomes.
There are many stories from people in similar situations — borrowers who say they have been left hanging by lenders who lose paperwork, make new demands for documents, change programs — but somehow never get around to finalizing the restructuring of loans. The Obama administration recently changed the rules of f its loan modification program to try to encourage permanent modifications, but it remains to be seen how things work out. Interestingly, Chase made his modification permanent shortly after the article had appeared, by the way.
We also have a client who has been diligently and obediently making her Chase trial loan mod payments for over 8 months now (and remember the trial is supposed to be for 3 months). She has heard no word from the bank about making the modification permanent despite multiple efforts on her part to contact the bank regarding the matter.
There is much room for improvement for loan mods and despite Obama’s Making Homes Affordable Program, things just haven’t progressed to an effective and useful point yet for home owners who wish to modify their mortgages.
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