Happy Holidays from Mortgage Lenders
The Associate Press is reporting that Citigroup Inc. will suspend foreclosures and evictions for 30 days. This moratorium will provide temporary relief for about 4,000 borrowers during the holiday season. Other lenders are expected to follow suit continuing a tradition that began last year for suspending foreclosures during the holiday season.
Thanks a lot.
A report release earlier this month by the U.S. Department of the Treasury indicates that many of the nation’s largest mortgage lenders are not doing enough to lower the numbers of home foreclosures. In one case the report found that after eight months of participating in the Home Affordable Modification Program (HAMP) Bank of America had registered a dismal 15 percent of the more than 1 million delinquent borrowers who are potentially eligible.
The HAMP, introduced in March 2009, provided guidelines for lenders to modify a home mortgage, such as capitalizing arrearages, extending a mortgage to 40 years and reducing the interest rate, until the payments get down to 31 percent of a borrower’s income.
One reason for the low numbers of loan modifications is that it is labor-intensive, according to John Rao, an attorney with the National Consumer Law Center. Mr. Rao testified to Congress earlier this year that lenders are not compensated for the labor-intensive process of a modification, whereas they are compensated for the extra work in foreclosing on a home. In other words, there is no real incentive to help the homeowner. Some lenders have delayed the loan modification process until the homeowner is forced to file bankruptcy and then add thousands of dollars in interest and costs to their home loans.
For homeowners that would benefit from a loan modification and a chapter 7 bankruptcy, lenders are especially reluctant to give permanent loan modifications, often offering interim loan modifications that last only two to three months. If the homeowner files for bankruptcy, the lender will often withdraw any workout plan leaving the homeowners further in debt.
The road to saving your home and easing your monthly debt obligation can be a perilous journey. It is best to use an experienced bankruptcy attorney to guide you through this difficult path. Until Congress decides to offer an effective program that offers real relief, bankruptcy can be a powerful option for saving your family’s home.