Loan modifications hard to come by
| Friday, Sep 18 2009 04:21 PM
Last Updated Monday, Sep 21 2009 10:28 AM
Resources for borrowers
* For information about the federal government's Making Home Affordable program, call (888) 995-HOPE or go to http://makinghomeaffordable.gov/.
The site has tools to help you determine if you might qualify for refinancing or loan modification under the program, how to understand your mortgage statement, and an extensive list of frequently asked questions.
You can also find out if your loan servicer is participating (you as an individual still need to meet various qualifications).
According to the Web site, participation is mandatory for servicers of loans owned or guaranteed by Fannie Mae or Freddie Mac (Government Sponsored Enterprises or GSEs). Servicers of non-GSE loans can choose whether to participate, but there are incentives for them to participate, so many are, the Web site says.
* For free counseling on housing-related credit issues, call Consumer Credit Counseling Service of Kern and Tulare Counties at (661) 324-0750.
* For information on avoiding loan modification fraud or to file a complaint against a real estate professional, call the California Department of Real Estate at (559) 445-5009 or go to www.yourhome.ca.gov.
Beware of foreclosure rescue scams
* Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their homes. Recognize and avoid common scams.
* Assistance from a HUD-approved housing counselor is FREE.
* Beware of anyone who asks you to pay a fee in exchange for a counseling service or modification of a delinquent loan.
* Beware of people who pressure you to sign papers immediately, or who try to convince you that they can "save" your home if you sign or transfer over the deed to your house.
* Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
* Never make a mortgage payment to anyone other than your mortgage company without their approval.
Source: http://makinghomeaffordable.gov
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Felix Adamo / The Californian Danielle Demison of Bakersfield had an 80/20 loan. She was able to modify the second loan but not the first, and now it looks like she'll lose her home. She's a hospice nurse and her husband is out of work. They have four children.
Danielle Demison thought she was making a good investment when in 2006 she bought a house in southwest Bakersfield for $395,000.
Her timing couldn't have been worse, as she bought at the peak of the real estate boom. The home is now assessed at $202,520, but a similar home nearby just sold for $149,000. What's more, the hospice nurse's husband is out of work.
Demison, 36, purchased her house with a tandem loan, that is, 80 percent from one institution and 20 percent from another.
The mother of four was able to modify the smaller loan, but said Litton Loan Servicing wouldn't budge on the other one.
"They just said point blank they don't want to do a loan modification," she said. "The investors think they'll get more money if they foreclose."
That struggle is playing out all over the country for homeowners, many of whom were hopeful in February when the Obama administration announced a plan to help borrowers who owe more than their homes are worth.
The Making Home Affordable Program was supposed to help up to 4 million Americans avoid foreclosure by reducing their monthly mortgage payments.
But critics are blasting the program as slow and ineffective. As of June, about 1.5 million homes have gone into foreclosure this year, but just 235,247 borrowers have been placed in trial loan modifications, according to a U.S. Treasury Department report.
"It's really nerve-wracking," said Demison, who is resubmitting her application. "I'm on an emotional roller coaster. I don't know if I should be packing or what."
Litton didn't return telephone calls seeking comment. It has modified 3 percent of 60-day delinquent loans that are eligible for the Making Home Affordable program, according to the Treasury Department.
Who's getting modifications?
Only 15 percent of borrowers eligible for the program have received trial loan modifications, particularly bad news for Bakersfield homeowners.
Last month, real estate data firm First American CoreLogic estimated that 87,480 homes, or more than half of local properties with a mortgage, had negative equity at the end of June. In other words, they owe more than their homes are worth.
Treasury officials didn't respond to requests for an interview about the pace of loan modifications, but in August, Assistant Secretary for Financial Institutions Michael Barr told Bloomberg News that "some of the servicers could have ramped up better, faster, more consistently."
The California Bankers Association said the program is still very new, and banks need time to hire and train staff to meet an onslaught of demand.
"Making Home Affordable was announced in February and implemented in April, so we're talking about a program that's only been in effect a few months," said spokeswoman Beth Mills.
To pay or not to pay?
David Lopez, 59, is angry that promised help hasn't been delivered.
"I went to the government Web site and did everything they asked me to, and after a month they said my request was denied," he said. "They said I needed to be at least two to three months delinquent before I could get help.
"I've been current on my payments, and I don't want to ruin my credit. I have my pride."
Lopez bought his house in 2003 for $179,950, pulled out some equity when it was valued at $500,000, and now says he owes $300,000 for a house worth $220,000, tops.
His billing statements come through GMAC, so he called them seeking a loan modification.
GMAC spokeswoman Jeannine Bruin said she couldn't talk about a customer's individual circumstances, but could speak in general terms. She said there is no requirement that someone be in default to get help.
"You should definitely call servicers before you get behind," Bruin said. "The sooner you call, the easier it will be to get an affordable loan because you won't have to capitalize all the missed payments and interest."
Bruin suggested going over the initial customer service representative's head if you aren't getting a quick enough response, or are told something inaccurate.
GMAC Financial Services has modified about a quarter of 60-day delinquent loans eligible under the program, putting it among the better performers in the industry.
A challenging process
The loan modification process is extremely stressful, said 53-year-old teacher Emma Christopher, who is raising four grandchildren.
You have to be a detective to figure out who even owns your loan, and it's hard to get anyone with authority on the phone, Christopher said.
"It feels like they actually want you to default," she said.
Lynn Anderson, 64, who is out of work and disabled, said she was shot down for being unemployed after completing voluminous amounts of paperwork.
"They knew that from the get-go," said Anderson, who lives in northeast Bakersfield.
What many people don't realize, said GMAC's Bruin, is the modification plan was designed for people who can repay a restructured loan, not those who can't make payments.
Those customers should ask for a forbearance, or agreement with the bank to skip payments for a specified period of time, Bruin said.
Elwin Morris of Tehachapi is behind because his monthly payment doubled after he refinanced into an adjustable rate loan in 2005. Morris hasn't made headway on a modification, so the retired roofer is trying, at age 80, to go back to work.
"I know I'm too old for it," he said. "But what choice have I got? They don't give any consideration to all the years I paid on time before it went up. I'm going to lose my home."
