No Improvement for New Mortgage Modification Transparency Rules
Now, after eight months of the Making Home Affordable Plan and it’s well documented lack of performance, the media is starting to publish solid statistics on the failure of lenders to exhibit good faith in mortgage modification negotiations. An article today in Pro Publica is one of those media posts. Pro Publica is a well known and respected source of information on the mortgage modification industry.
This article deals with the U. S. Treasury Dept requiring the explanation of denial to certain distressed mortgage applicants. One of the certified mortgage modification attorney firms I represent has developed software that specifies those same guidelines; so I find it ironic that the federal government is still so far behind the curve. Our software is being considered by the U. S. Departments of Justice and Treasury as the gold standard for considering all of those guidelines. We can inform distressed homeowners whether they qualify before they ever spend a dime on our services.
The article points out that the requirements for denial reasons will only be partial. Not much help, really. Again; why a distressed homeowner would seriously believe that their mortgage lender has their best interest at heart is beyond me. If your lender can’t or won’t tell you why you were denied, what else might they be hiding? You really believe that even their first offer of a modification is the best they can do? Why would you actually think that sympathetic voice on the other end is in any position to actually do anything, other than lose your documents?
The article does point out what is called an ‘NPV test’ or ‘Net Present Value.’ This was news to me, but not our software. Basically, it points out the financial advantages of either mortgage modification or denial by the lender/servicer. This is where the value of a professional attorney comes in handy. That attorney’s voice on the phone to your lender, armed with their ‘BS detector’ would be invaluable to a distressed homeowner.
The author incorrectly refers to a borrowers FICO credit score as one consideration. In fact, credit scores are not allowed as a consideration. A credit report may be used to document a borrower’s monthly consumer debt, but that’s all. Lenders (and attorneys) want to be assured that a beneficial mortgage modification will succeed in the long run.
The article goes on to point out that the distressed homeowner has no appeal. I would point out that our attorneys sure do, though.
It is incredibly humorous to me that lenders are afraid that if they are forced to reveal their NPV calculation, it will result intoo many appeals.
Imagine that, a flood of appeals pertaining to a proprietary lender calculation? This is truly laughable. Wait til Mandelman hears this!
The article returns to the profile of a previously denied distressed homeowner. She was denied a mortgage modification partly because of property equity. In fact, equity is not a consideration for the Make Home Affordable Program. If she had contracted a national cerified attorney (like the ones I represent) she might easily have been spared all of the heartache she has endured so far. A spokesman for her lender laid out the impersanality of her lender. It’s simply a financial calculation, no room for individuality allowed.
I want someone to explain to me why a simple calculation in their software can take six months to evaluate, and with no appeal even after that.
Both of the individual cases cited here had a second mortgage. Our attorneys negotiate both first and second mortgage modifications. These poor souls really needed a professional attorney.
The article finishes with the conclusion that the new disclosure guidelines won’t help much.
As I’ve said before, the four-million-home mortgage modification line starts over there. If you want to the front of the line, call me.
Read it here
