Friday, June 11, 2010

Federal mortgage modification made challenging by lenders

The Making Home Affordable mortgage loan modification program was began in early 2009 to help homeowners avoid foreclosure. The government began this program to help homeowners stuck in a mortgage they can’t pay by helping support mortgage modification or mortgage refinancing. Consistently, nevertheless, this program has troubles with lenders. Bank of America’s recent settlement of a Countrywide lawsuit highlights mortgage industry practices that could possibly be undermining economic restoration from the beginning.

Source for this article: Mortgage modification complicated by scofflaw lenders By Personal Money Store

The lending methods of Countrywide

The FTC has alleged that Countrywide participated in deceptive lending before it had been purchased by Bank of America. In June 2008, Bank of America purchased Countrywide mortgages for $ 4 billion in stock. Bank of America has agreed to pay $ 108 million in restitution for Countrywide practices, without admitting any wrongdoing. This $ 108 million can be split between the approximately 200,000 Countrywide mortgage holders that the FTC has found were overcharged.

Lenders not complying with the Making Home Affordable program?

The Making Home Affordable federal mortgage program is administered through private lenders. The government provides support and guarantees, while private lenders are required to comply with federal guidelines and qualifications for mortgage loan modification. In just one month this year, the Making Home Affordable call center fielded over thirty thousand calls claiming that lenders are not complying with federal guidelines. Given foreclosure numbers in April, this means that 38 percent of borrowers encountered issues in looking to get mortgage loan modification.

What are the alleged deceptive practices?

Countrywide is the first lender to be charged with deceptive lending practices, but other lenders may well be investigated. Some industry watchers allege that predatory lending practices permeate the whole mortgage lending industry. The four most common deceitful practices in the industry include:

  • Requiring the homeowner to pay fees and fines they are not responsible for
  • Stating a total balance of the loan that is higher than actual amount due
  • Adding additional to fees and charges intentionally
  • Not using basic regulations on the industry

Citations

MortgageLoan.com

RealtyTrac.com

financialstability.gov



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