HAMP Modifications – NOT – Why Not?

by Ken Kappel on February 4, 2011

Cydney Gillis over at Real Change News, wrote an very good article titled: “Bank of America stalls on mortgage help, homeowners say”.

The thrust of the article, and what has become common place for nearly all borrowers attempting to obtain a HAMP based loan modification, is that the delays and obstructions put up by the banks have a similar pattern. We sum it up below.

To the article:
Marcus Segarra wants a place he can sit down and discuss his mortgage problems. He wants to go to a bank branch or office where the same person helps him every time, not the various people he’s been dealing with at call centers in California or Colorado who provide different answers or none at all.”

”That’s just one problem that Segarra says he and his wife have faced while trying to get Bank of America to modify their mortgage so they can stay in their two-bedroom Algona home. In January, the 27-year-old Segarra lost his job as a union plumber and, since then, the couple hasn’t had much luck getting the bank to reduce their terms.”

”That changed on April 15 when Segarra learned that Bank of America had accepted the couple into a federal loan modification program introduced last year by the Obama Administration. But Segarra says that he had to call to find out that he’d been accepted – and he only did that, he says, because of a confusing packet he got in the mail from the bank saying that some paperwork was missing, without saying what it was.”

Ken here. Take away is that the banks don’t have their acts together. One hand does not know what the other hand is doing. Or, the is problem more sinister?

Read on.
Charlotte, N.C.-based Bank of America is the nation’s largest servicer of mortgage loans, in part because it acquired Countrywide Mortgage in 2008. Countrywide, in turn, was a national leader in making subprime mortgages like the one the Segarras got – an “80/20” deal in which the couple avoided making a down payment by taking out one loan for 80 percent of the home’s purchase price and another, “interest-only” loan that made up 20 percent.”

”The problem with interest-only loans is that they can’t be repaid. And the larger loan the couple took out was an adjustable-rate mortgage that would reset, or go up, in five years. Like many people during the subprime mortgage boom, the Segarras expected to refinance the home well before the five years were up – except now they can’t. With the recession, the value of the house has dropped below the amount they owe on it, making it impossible to refinance.” [Emphasis Added.]

Ken here. ”The problem with interest-only loans is that they can’t be repaid.

Really! That goes to the heart of the matter. These loans were made when the lender, the underwriter, knew that the loan could not be repaid when the payment reset higher. If true (we insist it is true) it’s fraud under a number of different banners. One that sticks out and is a legal charge that can be made in a law suit is: Unconscionability. There are many more, but, we’re not lawyers, and this particular post is not a primer in legal Causes of Action sounding in fraud to take to your lender in a law suit.

The reason these loans were made, with certainty they would fail, is a matter of “Control Fraud,” put on by the major Investment Banks who provided multi-multi-billions to lenders such as Countrywide (now owned by Bank of America).  They didn’t care. They took their fees off the front end, and then sold the loans, packaged into Mortgage Backed Securities (MBS) to unsuspecting insurance companies, pension funds and foreign entities. Those loans defaulted, and fall-down continues. In large time.

Where did the Investment Bankers, Banksters, get the money to loan? Why from Alan Greenspan’s Federal Reserve System. And, also the fact that the Fed allowed them to leverage up, and make loans using 30 to 50% leverage. Meaning, if they held $1 million cash in Reserves, they could loan $30 to $50 million to such as Countrywide, who, pretended to be the lender at closing. Legal. Some say no, because it wasn’t Countrywide’s money to loan and they failed to disclose that to borrowers at closing.  This has yet to play out, but, it will, in time it will.

Back to the article.
Segarra’s experience is typical, says Marcola Nixon, a HUD-certified mortgage counselor with Seattle nonprofit Solid Ground. Of the 50 to 70 calls that Solid Ground gets each week from people seeking loan modifications or other help, Nixon says, up to two-thirds of them are from Bank of America homeowners who are often very distraught.”

”They complain that the bank has lost paperwork or, like Segarra, they got a notice telling them some unidentified information is missing and, as a result, they were forced to start the whole process over. Others have entered the three-month HAMP trial, Nixon says, and then Bank of America dropped them without saying why they weren’t converted to a permanent loan modification. The bank charges them for the difference between their original mortgage payment and what they paid during the three-month trial.” [Emphasis Added.]

”The problems are not isolated to Bank of America, Nixon says, but it is one of the more difficult banks to deal with. Statistics from the HAMP program show that, of the 1.1 million Bank of America homeowners estimated to be eligible for the program – which requires being more than two months delinquent in payment – only 26 percent had received trial or permanent modifications through the end of March, putting Bank of America in the lower third of mortgage lenders nationwide.”

”Nixon points out, however, that the decision to modify a loan seldom rests with Bank of America, which bundles and sells its home loans to foreign banks and investors. If the investors don’t approve of a loan modification, she says, the only thing she can tell a homeowner is to try again later in hopes they’ll change their mind.”

”That, however, doesn’t explain the difficulties that Segarra and others have faced….  They really don’t want to give the modifications.”

They just want to make it look like they’re trying.”  [Emphasis Added.]

Ken here. That is the point. They’re merely kicking the can down the road, hiding behind rigged accounting (permitted by the Fed and Congress) because these banks are actually insolvent – bankrupt.  Walking Dead.

Yet, since they control Congress and the Administration, and are led by the Fed, they are not being shut down. Not being forced into Receivership, whereby the government would take over temporarily: fire bank officers responsible for fraud; clawback all the bonuses paid to these Control Fraud malefactors, law breakers, under threat of criminal conspiracy to commit fraud; promote honest bankers (Louise, I swear there are some, well maybe.); and, finally get rid of this sick game which keeps our economy from rebuilding our manufacturing base; growing back our middle class; and have a fighting chance to compete in the global economy.  Whew. There it is.

Finally. This article is a bit dated. What we understand from industry professionals that the same game continues regarding the fake HAMP process. What has become increasingly clear is that the Servicers of the loans sold as MBS: Bank of American, JP Morgan Chase, Citi and Wells Fargo actually make more money if they (ILLEGALLY) foreclose on you. So, they’re doing it.

Where is Congress?  Where is the Administration? They are cowering under the bus, shoved there by Banksters that actually control them through massive campaign contributions. Ever More.

Here’s out standard close in such matters.
We present this to you in order for you to have clear eyes and appropriate information in relation to protecting your family and your home if you have any type of mortgage issues.

Whether you are seeking a “fair” Short Sale, or, are underwater and seek a loan reorg with a principal balance reduction to current market value, fixed at 5% for 30 years. Nirvana for many.

In order to make plans – tactically and strategically – you must understand what is coming – and: WHY. This will enable you to proactively take action. With our book, combined with breaking news from this blog. we intend to give you the confidence and tools in order to invoke legal leverage to gain your intended outcome. That’s what we do – that’s what we’re saying. Stay tuned. Over time we’ll offer you additional tools and processes to help make that happen.

Print This Post Print This Post

Previous post:

Next post: