Loan modifications frustrate foreclosure solutions

The house owners who are facing the threat of foreclosure face problems even as the modification programme kicks off. Loan modifications itself are frustrating foreclosure solutions.

It is now six months since the much hyped programme of the Obama government, Making Home Affordable kicked off. But belying all hopes and expectations instead of foreclosures being contained these are increasing. The programme made its debut in February 2009 to solve the foreclosure problem that has brought in its wake high levels of unemployment and frozen credit. At the time of its debut the Treasury Department was optimistic that the measure would help nearly 3 million to 4 million foreclosure victims. Till date less than 10% have been able to modify their mortgages. Those who have been able to start modifications have complaints about its slow pace that is leading to frustration.

One of the sufferers is octogenarian Gloria Lowe who applied last spring when she had lost her work and was about to slip into foreclosure. Lowe bemoaned, “My pay(check) took care of the extra bills, my mortgage and my equity loan. And when that stopped, there was no way for me to pay it.” She tried contacting the bank for succour but this led to nowhere. Finally she sought the help of Consumer Credit Counseling Service of Delaware Valley. With their help she had to submit piles of paperwork that were necessary for her to get her first and second loans modified.
But even after four months to her dismay Lowe found that the fear of foreclosure still loomed large. She was expected to start applying from scratch. The bank did modify her first mortgage but it never bothered to reduce the amount on her second loan.

Ira Rheingold of National Association of Consumer Advocates said, “People are going to loan servicers and they’re not getting through. When they get through, the responses are incredibly slow. They provide paperwork time and again, and the paperwork gets lost. It’s like banging your head against a wall. This program, as it’s working today, is simply not making a dent in what needs to happen so that our economic recovery can continue.”

The Treasury Department agrees that that the programme did not make a fast start. It adds however that now the banks are gearing up to tackle the flood and have increased the strength of their staff. As yet there are 400,000 applications pending.