Yeah, you know the line. “I’m from the government and I’m here to help you.” Well, I want to share a story (actually a few stories combined) about the latest thing I have heard in this business that the government is doing to ‘help’.
I get calls all the time from folks looking for advice on a situation where they have gone to the bank to get a loan modification. All this comes from a government program called Home Affordable Modification Program or HAMP as most in the business call it. I have never seen a case where it worked the way we want it to and most of the time it is just a step toward a foreclosure.
It goes like this:
1. You get behind on your mortgage payments or are really feeling the pinch of making the payments because of a job loss or other loss of income.
2. You call the bank to get some help.
3. They take an application, review the data in a preliminary way and put you in a ‘trial modification’. They tell you to make a reduced payment for the next 3 months and once that is complete and they finalize your document review they will tell you what your new payment will be.
Now the fun begins. You start making the new reduced payments and feel a bit of relief. More money to meet your bills or just put aside in case you need it for a rainy day. You call the bank and they tell you they are still reviewing the file and they will call. 3-4 months go by and then you get a notice that your new payment will save you about $50 per month or that you don’t qualify at all. They also tell you that the amount you did not pay on all those ‘trial’ payments is now due and if you don’t catch up in about 30 days they will report you as late on your mortgage payments and damage your credit.
I’m not making this up. It happens all the time and we get into it because we are looking for help. Help we are told is there from the government and the banks that were too big to fail.
What is my point in all this? I hope to protect you and your friends and family from going through this pain. If you want to try this program then be sure to save the amount you did not have to pay so you can catch it up when it does not work out.
Now I would like to ask any of you who have done this and had a different experience to please share . The nature of my work brings me only the ones that did not work out. If you personally experienced a different scenario please email me and let me know about it. I don’t want to give the big banks and the government a bad rap unless they deserve it.
Lastly, if you are in trouble and need some help please call me before you try any of this. I will be happy to meet and discuss your options so you can go into this with good information. I really am here to help.
Thanks for listening,
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