‘Trial’ mortgage-reduction program backfires

teacups signifying brittle mortgage reductionsIn desperate times homeowners simply cannot trust their lenders.

Hundreds of lawsuits have been filed nationwide over bank foreclosure related to “trial” mortgage modifications that never resulted in payment reductions.

The same situation may be playing out in your neighborhood of Mar Vista, Westchester, Culver City — or perhaps even Beverlywood?

U.S. banks offered the temporary modifications as part of the government bailout funding of 2008. The idea was that homeowners paid a lower mortgage while waiting for a permanent reduction. In most cases, the banks never approved a permanent deal.

As many as 36 lawsuits from across the country against Bank of America have been bundled into one complaint in a Boston federal court. The plaintiffs allege that BOA “systematically failed” to follow through on the government’s Home Affordable Modification Program.

Only about a third of the people with the trial period plans (TPPs) actually had their reductions made permanent, U.S. Treasury figures show. Meanwhile, their actual debt to the banks continued to pile up as a result of the temporary lower payments.

The lawsuits charge that BOA deliberately ignored paperwork filings and treated homeowners with TPPs as if they were delinquent.

BOA says none of the people suing in the federal court case actually qualified for loan modifications. At the time, banks were under no obligation to accept permanent cuts in mortgage payments.

The lawsuit alleges:

“BOA’s general practice and culture is to string homeowners along with no intention of providing actual and permanent modifications. Instead, BOA has put processes in place that are designed to foster delay, mislead homeowners and avoid modifying mortgage loans.”

Similar lawsuits are pending against JPMorgan Chase.

The AP recently told the story of grocery store owners William and Esperanza Casco, whose TPP via Chase led to the foreclosure and sale of their Long Beach home.

“It is extremely unfair that someone like me and my wife who have owned our home for 17 years and never missed a payment could end up in foreclosure,” said Casco, 47, of South Gate.

While the Cascos made their payments, they ended up with a demand for $50,000 after the payment reduction failed to materialize. Chase told the AP that the couple were given several chances to qualify, but never did.

Last summer, the government charged the rules for PTTs, requiring the banks to verify income and other important details before granting TPPs. Homeowners who qualify and regularly make the lower payments are now preapproved for permanent mortgage payment deductions.

If you’re in fear of foreclosure and are being bullied by a mortgage holder, contact me, Cindy, right away so we can discuss your rights and options.

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