Tag Archives: loan modifications

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.

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