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Lender Bureaucracy Continues to Slow Mortgage Loan Modifications Under Obama Housing Plan

June 26, 2009

Despite the best efforts of homeowners and government agencies, loan modification efforts are failing at major lenders, USA Today reported June 19. The newspaper said homeowners who call their lenders for help are facing unreturned phone calls, bureaucratic mistakes and denials for no apparent reason, the newspaper said. This delays loan modifications for months -- and meanwhile, lenders continue with foreclosures, forcing people out of their homes despite their efforts to handle the situation responsibly. As a result, the paper said, lenders have foreclosed on more than 1 million homes since the Obama Administration's Making Home Affordable plan was launched, while the plan has modified just over 190,000 loans.

The article tells the story of Woodland Hills homeowners Robin and Craig Doyle, who have been trying for a loan modification through the program since February of this year. Robin Doyle sent her lender, Chase, a 200-page file supporting their application, only to be told a month later to redo it because it had become outdated. In later interactions, the lender told her that her file had been closed by mistake, and that she needed to include information on her homeowners' association fee -- a fee that doesn't exist. After USA Today called, Chase told the Doyles to resubmit paperwork for a fifth time -- then told them they don't qualify for Making Home Affordable because of the size of their loan.

We're surprised to see USA Today suggesting that this problem is limited to people participating in Making Home Affordable. As Riverside County loan modification attorneys, we can testify that we've heard from many borrowers who have been ignored or jerked around by their lenders, including those who aren't using the Obama plan as well as those who are. The trouble is not Making Home Affordable so much as it is the bureaucracy inside the lenders -- who are overwhelmed by demand, reluctant to lose profits and sometimes beholden to investors in securitized mortgages. Red tape may be a fact of life, but when people's homes, savings and credit ratings are threatened -- and the delays are hurting the housing market, as suggested in the article -- lenders need to step up.

Howard Law LLP represents people like the Doyles who need help convincing their lenders to take their requests for a loan workout seriously. Our Corona loan modification lawyers can often get through where clients have failed, simply because we are lawyers. When attorneys call, banks pay attention because they know they may soon face a lawsuit. In fact, we can use any evidence of predatory lending we find in your loan's history to help us negotiate you a better deal. If that's not appropriate, our Carson loan modification attorneys will still negotiate aggressively to lower your interest rates, change the structure of an exotic loan and more. Our goal is to keep you in your home for the long term by lowering monthly payments to an achievable, realistic amount.

If you know you need help getting a loan modification and you'd like to explore your options with Howard Law, you can contact us for a free, confidential consultation. You can reach us via email or call toll-free at 1-800-872-5925.