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Foreclosure Prevention? Lenders Unresponsive to Loan Modification Requests

June 30, 2009

As the number of foreclosures in the US increases, so do the complaints about lenders’ unwillingness to modify existing mortgages.  Instead of working to reduce the number of homeowners facing this terrible problem, lenders and loan servicers are trapping clients with dozens of forms, not returning their phone calls, and only rarely offering any relief.

According to USA Today, homeowners typically have to wait 45 to 60 days for any response to inquiries seeking loan modifications and some are still waiting five months after filing the initial paperwork.   “‘Some lenders may not be turning (homeowners) down right away because it might be politically easier to push them off and delay,’ says Joel Naroff at Naroff Economic Advisors.”

Approximately 190,000 mortgages have been modified since the Obama administration began its $75 billion foreclosure prevention plan in March.  In the same period, foreclosure proceedings have either begun or advanced on more than 1 million homes, with about 200,000 homes actually being foreclosed upon and repossessed.

The sluggishness of lenders will have an effect on all Americans.   As New York Times reporter Peter Goodman explains, “If the [mortgage relief] effort fails, foreclosures will continue to surge and home prices will probably keep falling, sowing fresh losses in the financial system and threatening to crimp credit anew for businesses and households.”

Lenders played the leading role in creating this problem; now it’s time for them to prove that they can be a part of the solution.

(Photo: respres)

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4 Comments
  1. Ken permalink
    August 15, 2009 2:49 pm

    The above article is interseting because we have a home Lodi,California thats in real danger. Here is a little bit of background of our dealings with the big banks and World Savings.
    I had lost a well paying job of 16 years 3 years prior to seeking a new loan with World Savings and ended up with a broken back on another job which left me unable to work and tied up in the court system for 2 years.
    In order to live in our home we needed to lower our monthly mortgage payments and ended up securing what is called a(PICK A LOAN) through World Savings and we were offered and needed an Equity Line of Credit in order to make needed repairs to the home. This seemed to be the answer our problems in order to lower the payments and remain in our home.We intended to refi as soon as possible but the ome market fell through before we could. In 2005 our homes estimated value was over $400,000.00. What could go wrong? In my wildest dreams I never would of thought the rest of this story could ever happen to us. Then it happened. I told you I had lost a well paying job of 16 years in the telecommunications field in 2002. The company Nortel Networks laid off nearly 100,000 people. I was bringing home around $65-75,000.00 a year. I had over $400,000.00 invested stocks and it seemed as if overnight it was all gone. All we had was the home. I was unable to secure a job very long in my profession. I ended up taking a job that paid $13.00 an hour with no bennies as a laborer for steel building construction outfit. I ended up loosing this job because of an on the job incident which broke my back. Now I am out of work and the home is in the uncapable hands of World Savings and our payments are rising. We had managed to keep up the payments on the loan and the Line of Credit. Then approx 2 years ago World Savings cut off our Line of Credit. World Savings sent us a letter notifying us that the homes value had dropped and our line of credit was no longer available to us . By 2006 the value has dropped from $400,000.00 to approx 178,000.00. I asked World Savings if they would refi us or give a loan modification in order to keep our home and good credit. Their response to us in September 2008 was that they would give us a new home loan at 3% after an appraisal of 178,00.00 came in from one of their appraisers and this was to be at no cost to us and our Line of Credit would be dropped to 0% so as we could pay off the remaining balance. It has almost been a year now and World Savings has denied us any type of loan and the line of credit percentage reduction offered to us at one time. In January 2008 World Savings teased us Presidents Obamas Home Afforability loan program and offered it to us. Since that time they have been holding us hostage. I have kept up calling World Savings each minth since about this loan program and each call ended up with a World Savings represenative telling us they had not been given all the details of the Presidents loan program as of yet and to wait until the end of next month. In our quest to save our home from foreclosure.
    I have secured a private loan officer at our expense in order to hanle our home loan. Since Jan, 2009 and up and until today we continue to get harrassing phone calls from World Savings about payments. It occurs all hours of the day, night, and weekends. In my heart I believe World Savings has no intention of helping us. Our only hope is in the hands of our loan officer.

  2. March 14, 2010 11:44 pm

    There is obviously a hole lot more to research about this. I think you made some OK points in Features also. Keep working ,fantasitc post!

  3. March 21, 2010 2:00 pm

    Hate to be off topic but I just wanted to get the scoop on if you could write another post to go a bit further into detail on the topic? This one was great but I would love to hear more!

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  1. Failure of HAMP, Possibility of Do-Over? « Americans for Fairness in Lending

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