We’ve been focusing on the bigger picture scams in mortgage land, and realized it might be helpful to also provide occasional examples of what is happening on the ground level.
Despite the fact that the Treasury-sponsored mortgage modification program known as HAMP has been roundly decried as a disaster, it lumbers on and seems simply to change rather than improve. Not only were too few mods done but banks also lied about program features, including that many borrowers were assured foreclosure efforts were not moving ahead when they were, with the result that quite a few program participants wound up losing their homes.
Given the program’s sorry history, struggling borrowers have good reason to be wary. Lisa Epstein of Foreclosure Hamlet, points out a new wrinkle that she worries may be a harbinger of bad things to come, namely, that HAMP trial mod offers, which once described in some detail what the permanent mod would look like if the borrower made all the trial mod payments and was approved, have suddenly gone silent on the back end terms.
One of Lisa’s contacts has graciously allowed her to upload an example. Lisa says there are many she’s seen or heard of like this, it may not be the new normal, but it has become common awfully fast.
This example is useful because it allows you to see the old mod template (scroll back to see the amount of detail in the permanent mod offer included with the trial mod) versus now, which is a “see you better make these payments now or the offer behind the door explodes.” Lisa reports that the borrower, Kathleen Dalton had a trial mod offer that the payment was $161 a month (as you will see) with escrow & PNI incuded. AHMSI took a year of her payments and then returned one payment July 2011 along with a letter revoking/denial of the modification.
After a protracted fight, she got a second offer, $511 a month, but silent on terms. Lisa writes:
It’s possible (but totally unknown) if the much higher amount is because her monthly HOA fee is now rolled into this cost. What is NOT known: length, interest bearing principal, interest rate, forbearance amount, HOA amount, property tax, property insurance, HOA fees, etc.
It isn’t clear what this mean, but in general, buying a pig in the poke is not a hot idea. Reader input welcomed.