A report at the Dylan Ratigan show confirms what we’ve argued for some time is happening: that banks are not making mods to viable borrowers because servicing is more profitable. In addition, an insider on the HAMP program says that the pressure to make trial mods to make the program look good wound up hurting people. As we have described in older posts, people who were give trial mods under HAMP got reduced payments for a while (in theory three months, in practice often a lot longer). If they failed ot qualify, not only were they asked immediately to pay back the payment reductions, but also penalties. Not only did the servicers not prepare the borrowers for this possibility, some encouraged homeowners to use their savings to pay down other debt, thus pretty much assuring they’d lose their home if they did not get the permanent mod.
Be sure to watch to the end to see how Goldman threatened one of the whistleblowers: