Aggravation is Building with Federal Mortgage Modification Plans

Submitted by Jen Jones on Fri, 08/21/2009 - 12:04pm

Aggravation is Building with Federal Mortgage Modification Plans

It's official: Making Home Affordable isn't owning up to its namesake.

After months of simmering frustration with the federal program designed to financially encourage lenders to be more cooperative with economically-challenged mortgage holders, it seems that the national media has finally created an outlet for the hundreds of thousands of Americans trying to sort it all out.

The success of a program like Making Home Affordable, and the general willingness of banks to assist consumers in adjusting their mortgages, is so critical because recent reports have indicated that avoiding foreclosure is one of the primary reasons people file bankruptcy. In most cases, a Chapter 13 will allow a person to stay in their home by catching up on missed mortgage payments.

Unfortunately, the disconnect between banks and the federal government is proving too vast to properly serve the folks who need mortgage modification the most. With unemployment still high and more people purging retirement funds to stay afloat, a well-executed mortgage adjustment could provide a beacon of hope. However, the tales of consumer woe in regard to sorting through the phone trees, paperwork, subsections, addenda and misinformed customer service agents are becoming more evident everyday.

An article on MSNBC.com brought to light the trials of a California couple working with Wells Fargo to adjust their mortgage after moving to North Carolina. After several run-arounds about missing and out-of-date forms, their application was eventually rejected partly because, according to the bank, they spend too much money on food.

Try as the government might to deny it, the Making Home Affordable program and the related entanglements twisting within the operations of cooperating banks is nothing more than a perfect example of a bureaucracy trying to do too much too fast. The race to help was started before the route was planned and the participants have found themselves well off track. For every one person helped there a hundred fighting a system designed to make their lives better.

We want to see people get the help they need. That being said, an unfortunate byproduct of the delays and setbacks is that people are waiting longer to make the most beneficial financial decisions. If a mortgage could be modified within a reasonable timeframe, the money saved could be put toward other debts. Once the process is started, applicants begin to base their hope for financial reprieve on the approval of their mortgage modification. When they realize months later that it may not happen, it's already too late.

One of the scariest reports predicts that by 2011, close to 50% of all homeowners in the United States will owe more on their home than the market says its worth. Other reports show that over 13 percent of mortgage holders are behind on payments or in foreclosure.

Foreclosures are the proverbial boat anchor to an economy trying to shake itself loose from the muck. Their burden is just too much to allow any sort of meaningful recovery and now it looks like the primary federal program designed to pull us free is only dragging us deeper.

If there was ever a time for one last push to initiate the "cramdown bill," it's now. If you are behind on your mortgage, speak to a bankruptcy attorney early. Chapter 13 bankruptcy is the only sure way to force your lender to accept a repayment plan. Call today. In North Carolina, call the Law Offices of John T. Orcutt at +1-919-646-2654.

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