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Treasury department puts pressure on banks to meet end of year deadline to modify home loans

The Treasury Department summoned Bank of America Corp., Citigroup Inc. and other mortgage servicers to Washington today to accelerate U.S. foreclosure prevention efforts ahead of a yearend deadline for some loan modifications.

The banks, which also include Wells Fargo & Co., JPMorgan Chase & Co. and Morgan Stanley, face a Dec. 31 deadline to make permanent the trial refinancings and concessions they extended this year to about 375,000 homeowners at risk of default.

Mike Rockwood has modified five of his own loans, including his personal residence and investment property. He has created a top-notch workbook to walk you through the steps of fighting to get the best terms on your loan modification.

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Banks blame homeowners for delays

An eligible borrower who doesn’t turn in all their paperwork by year-end jeopardizes their chance to get a permanent modification,” said Meg Reilly, a Treasury spokeswoman.

While Reilly said no one will be eliminated from the Home Affordable Modification Program, or HAMP, without a “a thorough review,” the Obama administration has so far failed to come close to the 4 million homeowners it set out to help. Banks have blamed the shortcomings on borrowers failing to turn in all their paperwork and confusion about eligibility standards.

“We, like all the other firms, are surprised that we still have documents outstanding,” said Jack Schakett, a credit loss mitigation strategist at Charlotte, North Carolina-based Bank of America, the largest U.S. mortgage lender. “We’re not going to really know the success of the program until we get a clear picture of what is missing,” Schakett said in an interview.

Rush to permanently convert more than half of the 650,994 loans that were in trial modification plans

Banks are rushing to meet a new Treasury deadline, announced Nov. 30, to permanently convert more than half of the 650,994 loans that were in trial modification plans at the end of October into permanent reductions by year’s end, he said.

Bank of America efforts

Bank of America is trying to move 65,000 trial payment plans into permanent status by Dec. 31. Roughly 20 percent of the borrowers in trial plans with Bank of America haven’t returned any documentation, Schakett said.

Of the 375,000 loans scheduled for conversion to permanent modifications, those that aren’t switched over by Dec. 31 may not be eligible for HAMP again in the future, the Treasury said.

Unemployement at root of far fewer homeowners able to qualify based on HAMP criteria

While the Treasury has identified more than 3.2 million loans as eligible for HAMP, lenders are finding that far fewer qualify based on their criteria. At Bank of America, which accounts for almost a third of the loans targeted by the program, 55 percent of borrowers aren’t eligible because they are unemployed, don’t live in the home or their mortgage payment is less than 31 percent of gross monthly income, Schakett said.

FYI: The Stop Your Foreclosure Workbook I discovered is your ultimate backup plan or street-fighting tactic if you are unemployed or otherwise not having success with your loan modification efforts.

Banks face sanctions and penalties

Lenders face “consequences” that may include sanctions and monetary penalties if they fail to perform under HAMP, the Treasury said last month. The program requires banks that took federal aid to help homeowners at “imminent risk” of default by lengthening repayment terms, lowering interest rates and making other changes to mortgages to avert foreclosure.

Before completing and sending in a loan modification package, you may want to obtain some coaching to combat the stall tactics banks/servicers are using to cut to the front of the line of other applications and get approved faster

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Homeowners – Need Some Sound Advice?

Get Out of Debt Workbook
Seasoned debt expert shares several little known but highly effective techniques guaranteed to get you out of debt fast – no matter how much you currently owe.
Stop Foreclosure
Get more help on fighting to stop a foreclosure with one of 7 options. For example, if a loan modification is not an option learn about a little-known government program that will stop a foreclosure in less than a day without an expensive attorney.

Also get the latest foreclosure news around the country, read Q&As and other resources.

Legally Restore Your Credit
If you are visiting this blog, you likely have mortgage lates, which are a big blemish on your credit report. Once you resolve your mortgage situation, you can legally remove those mortgage lates and all derogatory credit from your report without having to hire an expensive attorney or credit repair service.

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  4. Federal Reserve gave billions in secret loans to same big banks that deny and cancel loan modifications
  5. Treasury Dept admits HAMP report contains data mistakes

Tags: banks face deadline to permanently modify loans, foreclosure prevention deadline

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