HAMP, the administration’s loan modification program has been labeled a failure in most circles. Dissatisfaction has run high:
76% of borrowers had a “negative” or “very negative” experience with the program, and fewer than 9% found it “positive” or “very positive.” Almost half of applicants waited longer than seven months to receive a decision on their application. Nearly 75% of the time loan servicers lost documentation – which they then used to turn down applications. A Congressional oversight panel labeled the program a failure in December 2010. The Treasury Department has asked loan servicers to fix the problems but has not bothered to penalize servicers who don’t comply.
But what about the winners? For the lucky few who managed to dot all the “i”s, cross all the “t”s and get all the documentation in order. What does it take to win the loan mod lottery? According to one couple, it took two years, 17 relationship managers and 50 pounds of paperwork.
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Other than the anguish, sweat and tears, what will this loan mod cost them?
After two years of effort, the monthly payment on their Chicago-area home was reduced from about $1,175 a month to $861. It’s not a free ride: Their original $90,000 mortgage is now a $98,000 mortgage, and the couple will make up for the lowered payments with additional payments on the end of the loan.
Now that Schmalzes have their loan mod, they may qualify for an interest rate reduction. I wonder if they are ready to sharpen their pencils?
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