Are Temporary Loan And Mortgage Modifications A Scam?

24 Sep

As part of the Troubled Asset Relief Program financial bailout, many large national banks accepted huge sums of money from the United States government. Many of these large banks also signed agreements with the United States Treasury, in which they agreed to participate in the Home Affordable Modification Program. This program provides participating banks and mortgage servicers incentives to provide affordable mortgage loan modifications and other alternatives to foreclosure to eligible borrowers who are in danger of losing their homes.

Many banks have worked hard with homeowners to provide the homeowners with temporary trial modifications of their loans. These trial modifications, which are basically temporary modifications to the loan, are designed to lead to homeowners entering into permanent loan modifications with their banks, in order to save their homes permanently. Many homeowners have complied with temporary loan modifications on a trial basis, by providing the required documentation and making all agreed-upon payments towards the loan as it has been temporarily modified. However, many banks have not lived up to their promise to provide homeowners who have satisfied all requirements of a temporary loan modification with a permanent loan modification. This has resulted in thousands of residents across the country being deprived of the opportunity to permanently cure their delinquencies and save their homes.

The Home Affordable Modification Program has allocated to it approximately $75 billion dollars of government funds. Unfortunately, many banks have not gone far enough to make sure that their homeowners can obtain a permanent mortgage modification, even after the homeowners have satisfied all of the requirements of a temporary mortgage modification, which is supposed to lead to a permanent modification. Many of the agreements that the banks have with the homeowners state specifically that if the homeowner is in compliance with the loan modification trial period and makes all payments during the trial period, then the bank will provide the homeowner with a loan modification agreement on a permanent basis, but in practice this has not always happened.


These practices are not only contrary to the spirit of the federal legislation that created the Troubled Asset Relief Program, but may also violate the agreements between the banks and the homeowners. If you or someone you know has been effected by this practice, please contact us to discuss your legal options.

7 Responses to “Are Temporary Loan And Mortgage Modifications A Scam?”

  1. Denise September 24, 2011 at 6:53 am #

    Hello Mr McCandless ( Tim) :
    I have been following your blog for months. I just wanted to Thank you for the work you do. I am certain it has helped 1000’s that read it and follow up on information provided.
    Through you ; we were directed to local agency that has met with us and at least mounted a defense. ( I am not certain if we will be able to keep our home , but we at least a fight…Thanks to you.)
    I have read this latest blog post on Hamp and Temp Mods and it inflamed me. It is a a com0plete and total scam and fraudulent practice that the banks are employing. Over a year and still no answer ( after sending numerous reports and records, and attempting to meet all of their conditions.. they still accelerate the Foreclosure actions.)
    My single largest complaint is the deception used against me: The Bank was contacted prior to my missing a single mortgage payment. I told them I was wrongfully terminated and waiting on Unemployment ( which was fought by former employer as an added burden and action against me. The Bank told me: ” Oh , do not worry you have made your payments and we will work out a modification or plan to met your temporary needs. They told me not to pay my mortgage for at least three months and submit the paperwork….after 6 months I asked if I should not submit at least a payment: The bank said No, That only the full balance would be acceptable. ….Of course it has snowballed. Now I owe over 12 months and interest and late fees and it looks like they are going to sell home at auction. I still have not received a denial from bank…
    It is Fraud pure and simple. I live in a Non-judicial state and The bank will sail through foreclosure without even having to make answer for their actions. I taped them telling me not to pay.
    Somewhere somehow this has to stop. On our small city block there are 12 homes for sale and the neighborhood is going downhill rapidly.
    I did qualify for the HAMP, but did for ELHP ( but that program is drawn on a lottery basis and I seriously doubt I will “win” the lottery.)
    I am going to keep on fighting using the Attorneys and this site ( if I have to file personally).
    Again Thank you for this blog and the information. You are much appreciated.

  2. N.light September 24, 2011 at 4:34 pm #


    I am just wondering what are the remedies for the homeowners who had gone through the temp. mod. and the banks reneged on the contract and the promise to give homeowners a perm. mod. I look forward to talking with you, thank you.

  3. Depressed Person February 22, 2012 at 1:36 pm #

    My mortgage company is offering me an in-house modification. My concern is that they may not be safe or that my mortgage company may being pulling a fast one on me. My mortgage company says that they don’t participate in the HAMP modification process.


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