Wednesday, August 18, 2010

New Survey Shows Loan Mod Problems

A new consumer survey of households accross the country that have received, or tried to receive, a loan modification from their bank or servicer shows that banks routinely make errors or blatently break the rules established by the federal Making Home Affordable program.

The survey, by ProPublica, gives empirical evidence to what many of the MN Home Ownership Center's network of Foreclosure Counselors have been hearing for the past year: trying to work with servicers to obtain a loan modification can be an EXTREMELY frustrating undertaking.

Here are some of the results from the survey:
  • On average, homeowners had been seeking a modification for more than 14 months.
  • Homeowners seeking modifications reported having to send the same documents nearly six times on average.
  • 175 homeowners say they were advised, incorrectly, to fall behind on their mortgage in order to qualify for a modification.
  • Nearly half of the homeowners reported spending more than 10 hours per month (collecting documents, waiting on the phone, etc.). Most said they call, fax or mail once a week or more.
Most frustrating for those surveyed was that many times the servicers themselves made mistakes that resulted in a denial, and many times homeowners found the reason for denial unclear.

If you've thought about seeking a loan modification with your lender, there are ways to simplify  the process (although it's NEVER easy) and you want to be EXTREMELY careful that any modification they offer is really in your LONG-TERM best interest. The Center's network of Foreclosure Counselors are ready, willing and able to work with you on applying for a modification and help you decide if it will work for you.  In addition... there may be other ways to avoid foreclosure too.  Your counselor can help.

ALSO... we couldn't post about loan modifications without warning Minnesota Home Owners AGAIN, to make sure that they DO NOT PAY for any third-party loan modification service. Deal directly with your lender yourself, or with one of our free, non-profit Foreclosure Counselors. For additional information about preventing foreclosure in Minnesota, click here.

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