There was an interesting article over at Forbes.com recently outlining some of the painful realities associated with trying to get mortgage loan modifications with banks. Despite the pressure the Obama administration is trying to apply getting a decent loan mod is often difficult or even impossible. Here are some excerpts:
The mortgage industry claims it has provided relief over the last two years to 4 million homeowners who were having trouble paying their mortgages. But all help is not created equal.
Take Brooklyn resident Marcia Brown, an emergency room nurse who has received two loan modifications from her Santa Ana, Calif.-based mortgage servicer, Carrington Mortgage Services. With her husband disabled from a stroke, Brown couldn’t make the payments on her adjustable-rate mortgage (ARM) after the monthly payment more than doubled to $4,000 in 2006.
So when Carrington offered her a second ARM that would temporarily lower her payments, she took it. “We had no choice but to accept the modification terms that left us with payments too high and an interest rate that is adjustable,” she says. When her payment jumped up again earlier this year, Carrington offered another ARM. In June, Brown reluctantly accepted. “It has been a very difficult process with very few options,” she says.
According to counselors at ACORN Housing, a nonprofit that tries to prevent foreclosures, if Carrington had given Brown a modification under the Obama administration’s Home Affordable Modification program, she would be paying a fixed rate of $1,600 a month for 30 years. Instead, Carrington gave her a modification with an initial monthly payment of $2,800. “Under the Obama plan, our payments would have been much lower. This doesn’t seem fair,” Brown says.