Foreclosure Frustration: The Trouble With Loan Modifications
Homeowners like Gloria Lowe face hurdles even after a loan modification begins.
Aug. 21, 2009— -- Six months after the government announced that the Making Home Affordable program would help stem the tide of foreclosures, the opposite appears to be happening.
The Making Home Affordable program was launched in February to help address the foreclosure crisis brought on by rising unemployment and tighter credit. At the time, the Treasury Department said that the program would help between 3 and 4 million homeowners. So far, fewer 10 percent have had their mortgages modified, and those who have tried have said that the process is slow and frustrating.
When 80-year-old Gloria Lowe applied this spring, she was out of work and on the brink of losing her home.
"My pay(check) took care of the extra bills, my mortgage and my equity loan. And when that stopped, there was no way for me to pay it," Lowe said.
Lowe said she tried calling her bank for help, but got nowhere, so she turned to the Consumer Credit Counseling Service of Delaware Valley. Credit counselors there helped Lowe submit the reams of paperwork needed to modify her first and second loan.
But four months later, she found out she was still at risk of foreclosure and would have to start all over again. Even though her bank modified the first mortgage, it never looked at reducing the rate on her second loan.
"People are going to loan servicers and they're not getting through. When they get through, the responses are incredibly slow. They provide paperwork time and again, and the paperwork gets lost. It's like banging your head against a wall," said Ira Rheingold, executive director of the National Association of Consumer Advocates.
"This program, as it's working today, is simply not making a dent in what needs to happen so that our economic recovery can continue," he said.