Richard Neiman, in his Congressional Oversight Panel report, called Treasury's goal for home loan modifications at 25,000 modifications a week "robust." By those calculations there should be close to 300,000 homeowners with loan modifications today. Truth is, they're about 298,000 short.
Despite the apparent failure, last week Ocwen Financial threw themselves a little party for holding 770 of the 1170 successfully completed loan modifications since April. That's a little like getting an ata-boy award for coming home with a "D" on your report card.
Over the weekend Bank of America announced that it had enrolled 125,000 homeowners in the HAMP trial period. Considering Treasury's demand that the banks come up with a collective 500,000 by November, that's like starting your homework at 11PM on a Sunday night.
In reality, since the program's introduction in March, banks and loan servicers have done very little when it comes to follow through. There's very little incentive, oversight, and accountability when it comes to the actual paperwork.
The actual NPV (Net Present Value) test to determine rates is still a secret and eludes most people. Lenders don't have to provide any reason for denying the modification once the three month trial period is completed. In many cases a modification can actually increase the monthly payments. So much for transparency.
The majority of the offers are nothing more than a plan to keep homeowners in debt and a state of bondage for years to come, according to Brent T. White of the James E. Rogers College of Law. Attorney Walter Hackett writes on his blog Livinglies how "a homeowner will be offered a 'workout' that can result in the homeowner being 'worked out' of his or her home." He explains it in his post.
Thousands of frustrated and frightened homeowners have posted their stories on blogs and forums like givemebackmycredit.com or Loansafe.org, a community of over 20,000 homeowners getting together to save their homes and turn to each other because there's no where else to turn.
In her post, one of Loansafe.org's members, Teresa Beougher, writes:
Your Credit and Debt cycle will be coming to a halt soon enough. Once upon a time FICO meant something to people, but as the days pass and information is spread thru out the Social Networks that you so blatantly ignore, FICO will be little more than a nasty four letter word in the coming days. You have pushed us aside for the last time. The Government has offered "Making Homes Affordable" which is nothing more than another stimulus package for and industry that is well over padded to begin with. You sit and spin your lies, half truths and all the while, you expect us to just continue to pay for something that you inevitably plan to take anyway in the end.
Our fearless leaders and elected officials don't really seem to have much to say when it comes to hundreds of foreclosures a week - and that's just in their own districts.
Congress's apparent strategy in dealing with this is to sit back and let it sort itself out. Remember when the banks were telling us that? That Americans were a tough bunch and they would find a way to save their own homes by getting second jobs, turning down the heat, and not sending their kids to college? That if they really wanted to keep their homes they would find a way to pay and pitch in for the $38 billion in bonuses bankers needed to give themselves.
My wife and I have been in this struggle for over a year. We've been scammed, berated, conned, and pushed aside every step of the way. When we reached out relentlessly to Massachusetts Attorney General Martha Coakley, we received a form letter explaining how busy she is. Rep. John Tierney's office left a voice mail saying, "I didn't realize you required or expected some kind of action." Barney Frank, John Kerry, and the rest sent us back to Tierney.
So, while the banks, servicers, and lenders are waiting for American tenacity to kick in and pay up and Congress is working hard to keep their "campaign contributions" coming some American's are banding together to help each other and telling Congress to get to work.
The members at Loansafe.org have put together a petition demanding that Congress take action:
We propose an immediate halt to all foreclosures until new, mandatory guidelines are established and that these guidelines be overseen by a new Consumer Protection Agency, which was recently recommended by President Obama and endorsed by Sheila Bair, chair of the FDIC. We also demand that these guidelines include not only a simple 31% of the borrower's gross monthly income, but that the Net Present Value (NPV) test: (a) be created and administered by the government, not the banks, (b) have its data, assumptions and formula published so that they may be verified by the public, and (c) be made available at www.makinghomeaffordable.gov in a calculator form so that people can learn immediately, with the other eligibility questions available there now, whether they're eligible for HAMP. We are also strongly advocating that additional guidelines be formulated that would open the door for modifications at an even a lower rate in significant hardship conditions and for writedowns of principal when homes are severely underwater.
Without oversight and regulation banks and servicers will continue to pillage as they've been allowed to do for years. Hardworking and previously trusting families will be thrown out of their homes or left to pay for a home that has lost most of its investment due to artificially inflated values. Even with what's being laughingly called a modification families are still left strapped with no way out.
The petition continues:
There is documented evidence that the current system is not working, as reflected in the rising foreclosure rates across the nation and the thousands of people who attend NACA "Save the Dream" events in an attempt to get their loans modified. There is ample evidence that the current HAMP and other modification guidelines are being interpreted differently by each bank, reflected in many places including the scenarios described by the 20,000+ members of the loansafe.org community. Additional evidence can be found in hundreds if not thousands of complaints and requests for assistance sent by struggling homeowners to their Senators and Congressmen across the country, as well as the Office of the Comptroller of the Currency and other agencies that have been instituted to regulate these banks.
By now, you probably know someone in your family, neighborhood, or at work who is struggling to keep their home. You've also probably figured out that they aren't losing it because they were greedy, as the banks would like us to think. If you don't know someone now, chances are in the coming months you will. According to many analysts a second and third wave is coming. Now is the time to act.
As one homeowner and member of Loansafe.org wrote on my site:
The HAMP programs initiated with great intent by our President, in an unfortunate circumstance of time, are being played over by our banks. Banks deny modifications for unreasonable reasons (one of the latest received by many is "Your Hardship is not a permanent situation.") Homes are being foreclosed on in the middle of trial modifications. Other homeowners are being offered a new loan ABOVE their original mortgage agreement. The banks are getting funded for trial modifications, but have no one overseeing their efforts in modification permanency. The program is not working as intended.
It is time to save the American Dream, and get Wall Street out of Main Street!
Click here to sign the petition.
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