Uncertainty in the Loan Mod Process is Barrier to U.S. Economic Growth

By Mandelman

Five years after the Home Affordable Modification Program (“HAMP”) first flummoxed American homeowners and we’ve managed to prove a few things to be true that previously I would not have thought possible…

1. That we are incapable of creating a loan modification process that works with any consistency or that anyone can claim to understand. Think I’m exaggerating? Okay, fine… then try any of these:

• Can you get a HAMP Tier 2 on an FHA loan that’s over 12 months delinquent?
• When will Fannie Mae only grant a forbearance and why?
• Does HSBC participate in HAMP as an investor or a servicer?
• Is qualifying for a DOJ modification the same at all servicers?
• Describe the basis upon which short sales are approved or denied?

Had enough? I thought so.

2. That we are pretty much incapable of getting better at modifying loans no matter how hared or long we try. It is apparently an exception to the “practice makes perfect” rule. I mean, we got better at space travel over time, but if loan modifications were like space travel, we’d have watched the Challenger explode monthly since 2009.

Based on any objective data, it’s much more difficult to improve one’s ability to modify loans than it is to get better at performing successful heart bypass surgery on toddlers.

3. That the President of the United States can introduce a $75 billion program… describe it as being absolutely crucial to our economic recovery during the worst recession in 70 years… and then upon seeing it fail, simply not mention it again… and still get reelected without the topic of your failure ever being raised… even by your opponent.

4. That even though at least a third of affected homeowners remains underwater… and even though its become much more difficult and costly to qualify for a mortgage… and even after 6 million homes have been lost to foreclosure… and with 53 percent of vacant homes remaining off the market… with unemployment still twice what it was in 2005, median household incomes having fallen for five consecutive years, and home prices in decline since last June…THE HOUSING MARKET IS SAID TO BE RECOVERING ANYWAY.

5. That minority communities can be ravaged by both predatory lending and predatory foreclosing, and not one African American celebrity will so much as mention it, let alone lift a finger to do anything to stop it. If Haiti has an earthquake, however, the <a class="colorbox" …read more