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North Carolina homeowners frustrated with banks slow response to modify their loans

Of the 188 Cumberland County homeowners who walked into Consumer Credit Counseling Service of Fayetteville with mortgages in default this year, only three ended up in foreclosure.

But more than half still are waiting for responses from mortgage lenders about modifying their loans, and some have been waiting since January. Only 21 have managed to get their loans permanently modified.

Poor track record nationwide

The pattern is repeated at the national level, with only 4 percent of homeowners who signed up for a government program to reduce inflated mortgages actually getting their payments reduced. According to a report this week, only $2.3 million of as much as $75 billion pledged by the government has been spent.

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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The Fayetteville credit counselors lend a hand

The Fayetteville credit counselors have 112 pending mortgage modification requests, with borrowers just trying to make payments as best they can while lenders drag their heels.

“That’s a horrible number,” said Patricia Tyson, CCCS director.

The mortgage default counseling side of CCCS is busier than ever. Counselors help borrowers who are behind by helping them set up budgets. They also negotiate with mortgage companies to lower payments through such programs as the government’s Home Affordable Mortgage Program.

The U.S. Treasury Department said Thursday that about 760,000 have signed up for the HAMP since it launched in March. But as of last month, only 31,000 homeowners had their loans permanently modified. Analysts say the low number of modified loans could lead to more foreclosures, pushing home prices down and threatening any recovery in the market.

Lenders say borrowers aren’t submitting the paperwork required to complete the program, but homeowners cite companies losing paperwork or claiming they never got it.

“We’ve had to resend documents and resend them and resend them,” Tyson said.

Wells Fargo and Bank of America as among the lenders with the most pending modifications

Acker cited Wells Fargo and Bank of America¬†as among the lenders with the most pending modifications. As of Nov. 30, the two lenders had completed only 98 modifications from 160,000 borrowers who signed up. Lenders also have been fielding claims that their mortgage servicers gain more from foreclosing mortgages than from keeping borrowers in their homes. Tom Goyda, a spokesman for Wells Fargo, said that’s not the case.

“If there’s a viable option for the consumer, then there’s no benefit to foreclosure,” he said. “We’re doing everything we can to avoid foreclosure.”

Wells Fargo has enrolled about 3,500 homeowners in the government program so far, according to the Treasury Department. Another 14,000 have completed all their paperwork and are close to completing the process.

HAMP program in a nutshell

The HAMP program allows eligible borrowers who are at risk of default to get their interest rate reduced for five years. That reduction comes only after a temporary modification that is extended once the borrower makes three payments on time and submits proof of income and a financial hardship.

The documentation is needed to ensure taxpayer help is not going to borrowers who can afford their payments but just want to lower them, Goyda said. He acknowledged that the early days of the HAMP program brought a volume of applications that swamped lenders.

“We didn’t always meet our own standards of customer service,” Goyda said. “We’ve done a lot of things between then and now to address that.”

Wells Fargo has doubled the size of its home retention team by hiring 7,000 more people, and changed the way it processes documents, Goyda said.

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
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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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  3. Legal Aid of North Carolina gets grant money to continue foreclosure prevention efforts
  4. North Carolina loan modification company shut down by Attorney General
  5. Federal Reserve gave billions in secret loans to same big banks that deny and cancel loan modifications

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