• Lisa Simpson
• Dec 11,2009
• In: Bank Homes

It is no Easy Task to Modify Mortgages

There is a lot of hue and cry about modifying mortgages but in reality it is no easy task. Teri Leahy has been a resident of Northridge for the last 20 years. She wants to spend her twilight years here and die here. But the bank had other plans. She said she loved the house, wanted to pay her bills and “do the right thing.”

Leahy is not alone. There are 650,000 others like her in USA in the same boat. They have qualified for the trial modification programme launched last February by the Obama government under Home Affordable Modification Program. As per this plan involving $75 billion, the borrowers who are trying to avoid foreclosure would have to enter a trial period of 3 months to prove they can be manage to be current on the modified terms of the loan.
Like others Leahy had some snag in the conversion of her mortgage loan. At first the bank said she could qualify but later they began to stumble through her documents. At present a loan collection agency is knocking on her door saying she has till 4th January 20010 to prove herself or else her house would be sold.

More and more common people like her are complaining that banks are losing documents, failing to properly communicate and the service companies are being far from cooperative. The situation is so grave that the Obama administration has released a new set of rules to place more pressure on the lenders for converting the trial ones into permanent loans. The lenders are now expected to inform the Treasury Department of the government each day about the modification position.

Phyllis Caldwell of the Homeownership Preservation Office of the Treasury said, “We now must refocus our efforts on the conversion phase to ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones.”

The Treasury is planning to release from the first week of December the details of how many of the loans (650,000) have been upgraded. The step is meant to focus on the activities of the lenders and their servicers. The transparency has become essential so that many like Leahy do not forfeit their houses observed Paul Leonard of Center for Responsible Learning. It is a non-profit body trying to put an end to nefarious financial activities. Leonard feels that the intentions of the Obama team are good but the crux of the problem is whether the government, the lenders and the servicers are serious about actually getting the work done.”

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