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Mortgage & Housing Market News from HSH.com
July 28th, 2009

Loan mods still aren’t doing the job



The Obama administration is growing impatient with the slow pace of loan modifications and wants to know why:

An Obama administration effort to reduce home foreclosures by lowering the mortgage payments of struggling borrowers before they fall behind is failing to help as many people as expected.

Among the problems: Some homeowners are being told they must be behind on their payments to receive help, which runs counter to the aim of the program. In other cases, delays are so long that borrowers who are current on their payments when they ask for a loan modification are delinquent by the time they receive one. There is also confusion about who qualifies.

We’ve written before about the problems with the myriad loan-mod programs (see here, here, and here, for example). This time around, executives of 25 mortgage-servicing companies are in Washington to give their side of the issue. One of the holdups is the fact that, although the programs were announced back in February, it took the government until late June to provide needed guidelines to servicers:

One issue was that mortgage companies were waiting for final federal guidelines on key issues such as how to determine whether a loan modification is preferable to a foreclosure, said Mary Coffin, head of loan servicing for Wells Fargo Home Mortgage.

The WSJ piece also quotes some anecdotes which suggest that borrowers have been getting mixed (or bad) advice, such as “stop making loan payments and seek a modification later.” Unfortunately, some of the programs are not helpful until and unless a borrower was delinquent:

Employees at mortgage-servicing companies often tell borrowers they can’t be helped if they are current on their loans, said Michael van Zalingen, director of homeownership services for the nonprofit Neighborhood Housing Services of Chicago.

While it sounds counter-intuitive, the programs are often confusing as to who, exactly, is eligible. More guidance from Washington could help get the ball rolling.

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2 Responses to “Loan mods still aren’t doing the job”

  1. Marcia Says: August 31st, 2009 at 3:32 pm

    Please help me I am like every other consumer who is trying
    to stay in their home, have hardship, have limited income,
    have been paying my mortgage (not that I CAN! not that
    I can afford it, but am afraid not knowing who or where
    to go for help because Wells Fargo is my investor – not because I ever went to them to begin with but because Countrywide messed me up on my loan, than I had to go for another loan, got stuck with an interest only one, than they sold my loan to Wells Fargo who now is my lender, who I have been told that they are my investor, who I have been told that they have strict guide lines -who since April 19th I have tired to get a loan modification of which I worked with their executive office fiancial help people, which did not receive my papers
    or lost them, or told me to resend all of which I did over and over. Told me now that I have a deficiet of course, I do that is why I need help with my loan to begin with so that I do not loose my home which we have lived in for 23 years and that we are senior citizens with medical hardships, loss of income, etc. etc. etc. All we want to do is have a loan modification so that we can pay are loan and live in it with respect and dignity. Do not want to go bankrupt, do want to pay are bills and live with our own self respect!!
    Obamba ha got to get these banks to work their programs with all of us -Yes, force them to fix it now!! before we all go down! It is crazy – Please someone tell us what to do for you cannot trust anyone. Those that want money up front or the banks themselves.HELP HELP HELP

  2. Tim Manni Says: September 1st, 2009 at 2:05 pm


    Sorry to hear about your struggles. You right — be wary of anyone requesting money of front, they could be trying to take advantage of your situation. If you haven’t already, be sure to look over MakingHomeAffordable.gov, that’s the govt’s website. There you will find a lot of useful info on the loan mod program.

    Remember, while I know it’s frustrating, these refi and loan mod programs are voluntary for lenders. And unfortunately for many like yourself, lenders don’t seem to be complying.

    Keep us posted.


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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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