Watching the Making Home Affordable Program Fail
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If you are working out a home mortgage with your bank through the Making Home Affordable Program, you have my sympathy.
The program is in a bad place. First, out of the first 500,000 homes that have gone through the program in the trial form, less than 2,000 of the modifications have been made permanent. FAIL.
The government recognizing this fact has decided to do two things to the banks that are participating.
First they are going to shame them by outing the numbers. It reminds me of the phrase “Yeah, thats the ticket!” from the old Saturday Night Live episodes. If the banks are doing a program under government pressure that is not working out, do you really think shame is the answer? These are bean counters folks.
Then the second alternative is not to pay them for the work they have done as punishment. Can you say theft of services? Lawsuits? Treble Damages? Not a motivator in my books. In fact it is a demotivator, enough that smart bankers will look up and say we are in a failed program that we are not even going to get paid for even though it was promised?
The answer is to watch the bankers run away and the Making Home Available Program wither on the vine.
The White House is full of academics and aides from the public sector. There is not enough expertise from the private sector in the White House to stop these feel good programs from failing and provide true incentive for the banks to do the right thing.
And thus the families caught in a tough spot are the ones who are suffering the most. You do have my sympathy.
Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.
“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.
From its inception early this year, the Obama administration’s program, called Making Home Affordable, has been dogged by persistent questions about whether it could diminish a swelling wave of foreclosures. Some economists argued that the plan was built for last year’s problem — exotic mortgages whose payments increased — and not for the current menace of soaring joblessness. Lawyers who defend homeowners against foreclosure maintained that mortgage companies collect lucrative fees from long-term delinquency, undercutting their incentive to lower payments to affordable levels.
Last month, an oversight panel created by Congress reported that fewer than 2,000 of the 500,000 loan modifications then in progress had become permanent under Making Home Affordable. When the Treasury releases new numbers next month, it is expected to report a disappointingly small number of permanent loan modifications, with estimates in the tens of thousands out of the more than 650,000 borrowers now in the program. via the NY Times
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Comment by Joe S. on 29 November 2009:
Yea- I can attest the the truth of the article above! I got turned down in September and am now re-applying again in November. It is difficult to figure out what they want. I am self employed, and my business took a nose dive for almost a year. We have lived on savings and a financial gift from my mother. Now my business is turning around, but I am pretty much tapped out financially. I tell the bank (Wachovia) that I need just 90-120 days to sort out my mess and catch up but they are so far unwilling to do anything! Its driving me crazy- I have never ever been late on anything in my adult life. Now I am 30 days behind on the mortgage and scraping up my pennies to keep it from going 60 days behind. I am not giving up (yet) but it is difficult. At the end of the day, the bank does not give a rats a$$ weather or not I can save my house.
Wish me luck!
Comment by Stop Mortgage Foreclosure on 29 November 2009:
I can’t say that I’m surprised. The company that has the second mortgage on my home would not even offer me any kind of package despite the fact that I clearly qualify under the Making Home Affordable Program. I feel your pain, Joe, good luck!
Comment by Beckie on 29 November 2009:
To Joe S
I’m surprised that Wachovia is giving you a hard time. I am a real estate agent in California and we love Wachovia because they are the fastest and most lineant of all the lenders. Most of the Wachovia borrowers that I know have been approved and they handled their loan mod themselves without professional help.
Comment by Bobby on 30 November 2009:
The jobs need to come back. I’m not sure how much the government can do in the meantime aside from working on job creation. What a mess.
Comment by Portland Real Estate on 1 December 2009:
Unfortunately this is going to employ more lawyers in the end than anyone else. Its sad how that works. -Tyler
Comment by shauwn on 1 December 2009:
Very valuable information for everyone. Good insight to the truth in the lending world.
Comment by Bob on 2 December 2009:
I have heard of one person who had a Loan Mod successfully implemented. All others that I have spoken with are quite frustrated. With the bank misplacing their paperwork multiple times and the constant asking for yet another form or piece of information one might think that they actually are not interested in modifying anything.
Comment by Stephen Davis on 3 December 2009:
Great article and reporting. It would be so easy for the banks to lower the interest rate back to what the owner could afford before the adjustment. That is for the ones who could even afford that.
Pingback by Weekly summary of real estate news, Memphis comments, and other interesting stuff – December 6th - Memphis Real Estate Buzz on 6 December 2009:
[...] Shared Watching the Making Home Affordable Program Fail : The Real Estate Bloggers. [...]
Comment by Scott Nachatilo on 7 December 2009:
That’s really bad news, I think there is something wrong or missing with their program that did failed their program.
Scott@Financially Free Landlord
Comment by Dominique on 7 December 2009:
I wish the government would just stop getting involved in things they have no business being involved in. It is their so called “involvement” that got us into this mortgage mess in the first place.
Comment by Ken on 24 December 2009:
Boy what a mess this program is first let me say banks don’t know what to do let me start with this, When the Obama making home affordable plan came out in march I applied for a refinance at chase bank for a modification they told me to download and send the paper work that was on there web site. I got the entire paperwork submitted hardship affidavit, pay stubs, tax return, 4506T-EZ forms proof of residency. After all that I had to call chase about 60 times in a period of 25 days to go over everything with them and send out more pay stubs another hardship affidavit and another bank statement every time I called I got a different person that had no idea what they were doing. Then after all that I got a letter saying dear sir your application is cancelled we are unable to offer a loss mitigation workout at this time because of your income you can afford this mortgage payment go figure!!! If my income was in line for this refinance why didn’t I qualify? Then a week later I got a letter saying you insist that we help you so were going to offer you a forbearance for 6 months then after this trial period we will see if we can work out a permanent modification if you make your payments on time. Well then I called and was told wow that’s strange most of our trial periods are for 3 months? At this point I’m getting very frustrated after talking for about a half hour chase said just follow this plan and we will see if we can work out a modification at the end of this plan keep in mind I was never late on my mortgage in the first place when I started this plan the letter said you are current on your mortgage as of April send no money for May then start this forbearance plan in June 1st well I signed the contract and sent the 1st payment. After the 6 month plan was completed I called and asked what should I do for Decembers payment my trial period is up they told me to continue making the same payment and send more paper work I asked them what paper work they said pay stubs, hardship affidavit, tax return, proof or residency, 4506T-EZ form I said I already sent all that paper work in twice I was told I needed to send it in again so I did for the third time meanwhile I started to receive letters from chase saying your house is your home we want to keep it that way call us we’ll discuss your current situation but we cannot stress enough that the longer you delay calling us the fewer chances you have to keep your home WHAT THE HECK!!! Is this all about so I called chase and asked what this is all about then I was told I owed 6,800 dollars I said what I thought I was offered the plan from the government making home affordable they said no you were offered a forbearance plan then I said I was told this was the presidents plan you guys told me it’s a 6 month plan then we will modify your mortgage. All this time I thought this plan was part of Obama’s plan well I was misled now I owe this money what are we going to do the bank said I got to come up with the 6,800 dollars to bring this mortgage current meanwhile I get another letter for a three month plan close to what my payment was I called and asked what is this all about was told to make these payment’s and after this trial period we will modify your mortgage but we got to see if you can make these payments. Keep in mind this is what they told me the 1st time now I don’t know what to do the letter states make 3 payments Jan – March for 2,090 each then 1 payment at 11,000 I asked why this contract doesn’t say it will be modified after 3 months and was told this is the way we word our paper work well there’s nothing in this contract that says it will be modified I really don’t know what to do about this there telling me to sign it and send the first payment by Jan 1st what about the 4th payment for 11,000 we will put this at the back of the loan but they won’t give me this in writing don’t know weather there will be a modification or not and I have really can’t trust them to do this after last time they put me in a hole for 6,000 when I was current before all this started. All of a sudden I get a call from a chase analyst telling me I was pre approved for Obama’s Making Home Affordable Plan and she’s waiting for her supervisor to sign it meanwhile I asked what about the plan that they offered me before this she told me to wait and don’t sign that plan wait for this new plan, It will be a 3mth trial period here we go again I really don’t know what to do this has been a nightmare now for 7 months all I want to do is get this modified and move on with my life oh buy the way they asked me to send in more paper work do you believe this HELP!!!
Comment by Kevin Cooter on 1 January 2010:
Countrywide, before they became Bank of America, surprisingly actually did it quickest for me… over the phone. They then sent me a new promissory note that reduced the payment by a couple hundred dollars a month and caught up all of the back payments by lumping them together and putting them onto the back of the new 30-year loan. yay. Then they told me to sign it and have it notarized and sent back— which I did (after making copies, luckily). Of course they lost it. Yes… they lost it. Of course. What a surprise. I sent them the copy and have been making the payments as promised every month per the new promissory note they provided. They continue to threaten foreclosure because they admit they lost it. Oh well, they say. Thanks, Obama. These feel good plans really mean a lot to me. How about this you stupid politicians… why pay them ANY federal bail out money in the first place until they actually modify more than 1 out of 250 of the loans they have in default? Why use TARP money to make their balance sheets fat when they just withhold their help to us all? They’ve tightened down, more unwilling than ever to help. In fact, even good borrowers can’t get loans anymore. (FHA borrowers need more percentage down than they have needed for years). Want a conventional loan? Forget it if you live in a “declining market” (can you say “all of America?”) — can’t get mortgage insurance in many markets.
Comment by Kathy Bessner on 2 January 2010:
Hey Ken I am in the same boat as you. I sent a hand wriiten satement asking for a loan modification and was denied then went thru Obamas plan and sent 70-100 page faxes not once, not twice but 3 times. I am sick of it. I am not behind either but am out of cash. I have been trying to streamline and lock in as well because i am on an adjustable rate. That is still in the making since 10/09/2009. Go figure and Chase charged me for the app. fee. I am now calling on elected officials anywhere and everywhere. Good luck I have been at this since August 2009 and today is 01/03/2010.
Comment by Kathy Bessner on 2 January 2010:
Hey Ken 1 more thing ……. I have a Gennie Mae loan ……….. I understand that only fannymae and freddie mac are the only ones eleigible. ————- well the government backs mine just like fannie and freddie………. I need help ……… and can not seem to get it. I am so frustrated that I ask for a refund for my app today. I am going to send my elected officials a note everyday until I get a response. I only need temporary help and can not get that. Good Luck and wish me luck. Happy New Year
Comment by DaL on 14 January 2010:
I have a suggestion for all of you that are frustrated about the “runaround” you are getting from you’re bank. PAY YOU’RE MORTGAGE AS AGREED! If you are asking the goverment for help and by extension me as a taxpayer then I think you should have to suffer…if you don’t like it too damn bad! I am frustrated the I have to foot the bill for you idiots who could’nt or would’nt buy a house you could afford and save a little $$ for the bad times. You are asking for the taxpayer to bail you out! If it takes faxing things 50 times and waiting 9 mos oh well…guess next time you want to take a vacation or buy a new car you will think twice!
Comment by jeana on 30 January 2010:
After a year received Final Loan Mod MHA. My experienc same as everyone elses. I was thankful that I did have my payment lowered but all it did was add 40,000 on too my end of the loan, and added more years to it. I had planned to pay my home off well that will never happen I’ll be dead first. I reqested Chase to send me and itemized statment of fees and excessive charges. Chase collects lucrative fees from long term delinquency and adds to the end of the loan. And everyone praises these banks for doing such a wonderful job. Again the banks come out on the Platinum ticket. Just be warned when you get your final don’t expect that they are helping you out because they care for there customers. that is a lie and as I see it It is in writing. good luck to you all.
Comment by Cynde on 31 January 2010:
We asked about modification programs multiple times before our financial institution finally agreed that we qualified. First, we were told that our debt ratio wasn’t bad enough (one person actually told us that she didn’t see a problem because we were only “a few hundred dollars short each month”). Then, we were told that we had to be more than 60 days late in order to be referred to any kind of a program. Finally, in June 2009, we were told that we would be sent paperwork for the Making Home Affordable plan. Our paperwork stated that we needed to make trial period payments (smaller than our normal monthly payment) starting in August 2009. We also had to submit a stack of paperwork including proof of income, tax returns, etc., which we did. The paperwork stated that if we made the 4 payments on time (August 1, September 1, October 1 and November 1), we would be sent final paperwork. We made the four payments on time and heard nothing from the bank. On November 13, 2009, we received a letter that stating they had not received a copy of our tax returns. We had faxed and mailed this paperwork already so they should have actually had TWO copies of it. We sent a copy of our tax returns in their pre-paid envelope. On November 30, 2009, we received another letter, again stating they had not received a copy of our tax returns. This time we called and asked what we could do to make sure that the paperwork was routed to the correct place. They informed us that we needed to include our name, property address, phone number, loan # and case # on EVERY piece of paperwork sent in. We sent a new set of tax returns with every page having the information on it. We called a few days later and FINALLY they had them. All of this time we are stilling make the trial period mortgage payments on the 1st of each month. We overnighted the payments each time to make sure they got there on or before the 1st. On January 23, 2010, we received a letter that stated “Our records reflect that we have not received all of your trial period mortgage payments. As a result, you are at risk of losing your eligibility for a permanent Home Affordable Mortgage”. The letter states that if we feel it is an error that we can send proof. I have proof that all payments were made and are mailing the proof tomorrow but what says they are going to get it? Is this ever going to end?
Comment by jeana on 2 February 2010:
Justbec ause you pay trial payments does not mean you get a Final loan mod. I do not know why they tell everyone that. IT IS NOT TRUE. I paid 8 trial payments and been told everything you can imagine and faxed faxed resent overnighted called the Ex Resolution Team, Hope, Attorney General Office Bank Commision. wrote Whitehouse.gov any one who would listen. I think it is getting a little easier for homeowners now but when I went thru the progam started back with Chase Jan 09. Like I said before in other post I did get it Jan 10, thankful but it did leave me now underwater which I was not before and Chase added up fees and I did get a non detailed summary which I am not happy with and I again feel Chase just strung me along to get more money and my loan will never be paid off which before it would of been, The banks do not want to do loan mods. I am hoping that that the govt will step in a make them right off some of these excessive which of course into the banks pocket along with all the extra benefits that come there way.