The Making Home Affordable Program is a Joke: A Personal Testimonial
I’ve written before about the Obama Administration’s “Making Home Affordable” program and what I saw as its inherent flaws. What I did not know at the time the program was introduced, however, was how much frustration would be caused to homeowners seeking a modification by the apparent endless layers of bureaucracy and red tape that comprises the process.
In a nutshell, the program is supposed to work like this: if you qualify for the program, your lender was to notify you. You then submit a package of information and ultimately you are approved for a “trial modification” where your payment is adjusted (i.e., reduced). Make the trial modification payment for three months and, theoretically, you qualify for a permanent modification.
Simple enough, right? Not where the Federal government is involved.
In the past week, I was retained by a new client to help with a short sale after months of battling with their lender to get even a trial modification approved. Multiple requests for the same documents which had already been provided ultimately led my client to give up and sell the home. Additionally, I had another client contact me wanting to pursue legal action against his lender for giving him a similar runaround. Finally, I chased one lender around for another client (which I agreed to do pro bono because of a longstanding friendship, lest I be accused of profiting off of the modification process, and because I thought my help would consist of a single phone call to straighten things out on their file).
With regard to the last case, my clients were granted a trial modification late last year. In theory, they should have been done with their trial period in April and should have received word on their permanent modification. Instead, it is almost July and the best that their lender can do is to tell them when they call that they’re approved but, for some reason, they cannot seem to send out a written confirmation of the approval and inform my clients of what their new mortgage payment will be.
In an effort to break the logjam, I agreed to place a call to the lender (who happens to be one of those “too big to fail” lenders who begged Congress for a bailout last year) to find out what was going on. Here’s a timeline of events since I got involved two weeks ago:
Attempt #1: Lender could not talk to me yet since the authorization form (signed by my clients granting the lender permission to talk to me) was only received that day; I was told to call back after 48 hours. Surprisingly, the day after my call, my clients received a call saying that their matter had been forwarded on for final review, which we all naively assumed meant that my one call had spurred the lender into action (silly us for thinking that).
Attempt #2: It took the representative at least ten minutes to confirm that I had an authorization on file; thereafter, I was told that the reason that my clients had not yet received written notification of their approval for permanent modification was due to a computer glitch which they assured me had been fixed as I was on the phone with them (what a coincidence, right?) At the end of the call, I was told that the written notification was being sent out immediately.
Attempt #3: A full three days after the alleged written notification was sent, my clients still had not received any word and asked if I would call again. This time, after being on hold for twenty minutes, I was told that my authorization – a form that I have used for years and which has been accepted by every lender imaginable, including this particular lender on other matters – was not in the proper form. The problem? My contact information was on a fax cover sheet and not on the actual authorization. At this point, I roughed them up a bit. I asked them why it was that the only people who seem to get a permanent modification under the MHA program are those who contact their local news media with their saga. I further opined that the seemingly endless excuses given by the lender as to why the information could not be provided to me were an embarrassment to their company. In the end, however, I was told to resubmit my authorization with the contact information on the same page and call back in 48 hours. Funny how we’ve come full circle in just three phone calls.
The only thing I can surmise from the runaround given to homeowners by their lenders under the MHA program is, not surprisingly, that the lenders do not want to modify any mortgages, that they would prefer a short sale or foreclosure where they will be paid as much as possible sooner rather than later. To that end, it is my further conclusion that the endless delays are all part of the plan to make these modifications and the program promoting them fail miserably.
Note that I am not advocating some sort of further governmental action to force these lenders to grant these modifications. I think that the Federal government is telling enough private businesses what to do without forcing lenders to modify home loans. My point in writing this firsthand account of how this program works – or should I say, does not work – is to point out that the Making Home Affordable program has nothing to do with providing actual assistance to homeowners and everything to do with making elected officials appear as if they’re doing something to deal with the problem.