In Friday's New York Times, Floyd Norris writes what appears to be a puff piece for JP Morgan Chase, rather than a serious story about "Why Many Home Loan Modifications Fail." No doubt there are people out there having trouble meeting paperwork guidelines. Some people are also not making payments even after they get a trial modification. But Norris neglects to talk with the many folks who have sent their paperwork multiple times, only to have the banks misplace it. Or people who have been given more than one modification payment amount and don't know which to pay.
Norris focused his story around a visit to a Chase call center, rather than look at the dismal record most banks have in even getting trial modifications in place. The bank with the best record is Saxon Mortgage Services with 44% of its eligible mortgages in trial modifications. CitiMortgage is second with 40% in place. Chase ranked sixth on the list, with a modest 32% of its eligible loans in trial modification. But what happens at the call centers of Bank of America, where just 14% of eligible borrowers are in trial, or Wachovia, with just 3 percent? I'd like to be a fly on the wall in that call center.
The banks have such a dismal record, that the Obama administration announced last week that it would start riding herd on mortgage servicers (more on that in a future post). The administration will now require mortgage companies to develop and report plans to increase the number of completed modifications, and won't make incentive payments to mortgage servicers that don't convert trial modifications into permanent ones.
If you're having trouble getting through to your loan servicer or if your loan servicer is dragging its feet, call 1-888-995-HOPE (4673). I have heard reports that it's difficult to get through on that line. If you have trouble you can also contact your local HUD approved housing counselor.
I don't know who's to blame for paperwork not being completed; most likely there's plenty of blame to go around. In some cases people are surely not submitting the required paperwork. The government said it was streamlining the process to make it less onerous. And some banks may simply be overwhelmed with the numbers of applicants, that the paperwork is getting lost. Don't let missing paperwork or frustration derail your chance for a modification. If you're bank is not helping you, seek help from a HUD approved housing counselor.
But Norris hit on the real nut: banks often stand to make more money by letting a property foreclose, and booting its occupants onto the street.
