Owners Making Agreed Loan Payments Can Lose Their Homes Without Notice
The federal Home Affordable Modification Program is supposed to help struggling owners get revised mortgage terms that will make it possible for them to hold onto their personal residences.
But only a small fraction of those who apply are being approved by lenders, even when they are making trial revised loan payments on time, reports McClatchy Newspapers. And, if their applications are rejected, homeowners don’t even have to be notified that there is a problem, under standard HAMP application languaged OK’d by the U.S. Treasury Department.
The language waives rights which would otherwise apply to prevent a home from being sold without notice to the owner, the newspaper chain reports.
That’s what happened to Evangelina Flores, 58, who owned a modest home in California, according to the article, which relies in part on information from the law firm of Edward Lopez and Rick Gaxiola. The firm is handling Flores’ case for free.
She was timely making the revised trial payments and had been told to expect a permanent modification in December, McClatchy reports. But instead strangers showed up at her door on Dec. 1, saying that they had purchased her home, the article recounts. Her mortgage company claims to have sent her a letter approximately a week earlier rejecting her application, but can’t provide proof it was sent and Flores and the law office say she didn’t get it.
A Treasury spokeswoman tells McClatchy this isn’t the way the HAMP program is supposed to work and says a lender that sells a home before a borrower has failed the trial period is deemed “noncompliant.”
Legal administrator George Bosch of the Lopez and Gaxiola firm has a different take:
“It seems servicers are giving people false hopes by sending them a plan, and they are using the program as a collection method, getting people to pay them with no intention of modifying the loan,” he tells McClatchy. “I believe they are using this as a tool to suck people dry.”
Ironically, many of the original mortgages approved by lenders that got homeowners into trouble were approved without requiring borrowers to prove they had sufficient income to make the payments.
