November 17, 2009
The rising chorus of consumer complaints about the mortgage modification process is getting some attention.
In Florida, Attorney General McCollum has sent a letter to the Florida executives of Bank of America, JP Morgan/Chase, Wells Fargo and Wachovia, telling them to provide homeowners with a fair and efficient loan modification process. McCollum also requested the executives meet with him to discuss the banks responsibility to help solve the housing crisis.
"In my capacity as Florida's Attorney General, I have heard from hundreds of homeowners across our state who are desperately trying to save their homes by reducing their monthly payments or modifying the terms of their mortgage," wrote the Attorney General.
ConsumerAffairs.com hears from frustrated homeowners almost every day. Roy, of Clearlake, Calif., voiced frustration at trying to modify his Bank of America mortgage.
"They have been sitting on my loan modification for months," he told ConsumerAffairs.com. "I call them and they sayt hey received it but no one is assigned to it and its been expedited, but its been almost 5 months. I finnaly called H.U.D but it may be to late."
Christopher, of Anza, Calif., said he ran into a roadblock when he tried to modify his loan with Litton.
"Litton Loan Servicing offered us a trial loan modification, we made the three payments -- they closed out our loan modification without notifying us, and afterwards stated they needed an IRS form and didn't have it, so they turned us down," he told ConsumerAffairs.com. "We provided the IRS form at the time of application for the loan modification - they never said anything about it after that."
Pattern of frustration
McCollum says residents have his state have had similar experiences.
Homeowners who experienced excellent customer service from their banks at the time they originated their loans are now frustrated and disillusioned by the lack of response and cooperation they have received from their banks, McCollum said.
A recent report by the National Consumer Law Center suggests there is a very good reason so many consumers seem to be getting the runaround when they try and modify their mortgages. The reports says loan servicers, who do not own the loans, actually stand to sprofit if the troubled property goes to foreclosure.
The report, "Why Servicers Foreclose, When They Should Modify, and Other Puzzles of Servicer Behavior," reveals that servicers, unlike investors or homeowners, generally dont risk losing money on foreclosures.
"One common sense solution to the foreclosure crisis is to modify the loan terms in more instances," said Diane Thompson, a NCLC attorney and author of the report. "Foreclosures are a costly ordeal for the homeowner, the lender, and the community. Yet they continue to outstrip loan modifications because servicers have no incentive to help borrowers stay in their homes."
