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Are Lenders Backing Out Of Modifications?!

Holden Lewis, the mortgage expert at, just published a very disturbing post on his blog.

It questions whether mortgage servicing companies that agree to modify unaffordable loans are arbitrarily canceling those deals after the borrower has successfully completed the trial period.

Mortgage modifications prevent foreclosuresLewis tells the story of a woman who signed a modification agreement and not only made the required three-months worth of trial payments at the new lower amount, but a fourth payment as well.

Imagine her relief. She had proven her ability to make the modified payments and saved her home from foreclosure.

Then the lender said the deal was off and her payments were reverting back to the original, unaffordable amount.

We’ve all heard how lenders participating in President Obama’s Home Affordable Modification program are supposed to maintain the new lower payments for at least five years if borrowers successfully complete the three-month trial.

So what’s going on here?

This is not only unfair and dishonest. It’s downright cruel to allow someone to think they have saved their house, only to find out that the bank is nailing the door shut.

Lewis has heard this might not be an insolated incident. If you’ve had a mortgage modification yanked out from under you, we’d like to hear about it.

Click on “Comments” below and tell us what happened.

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Comments (10)
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10 Existing Comments
  1. Dave H said:
    on October 1st at 10:56 pm

    More documentation of same story but worse homes are being sold without further notice.

    Many More Homeowners to Lose Homes – the story not reported yet

    As an attorney at a major Phoenix law firm explained to me, there is NO ENFORCEMENT provision in the Treasury/Fannie/HFA “directives” or “mandates” for the Home Affordability Program. While folks are getting trial modifications few are being given permanent modifications even when timely trial payments made and qualify under the Net Present Value (NPV) test.

    The banks can ignore all the guidelines and there is nothing we can do about it. We are totally at the mercy of the servicers per the law firm I talked with.

    It is reported that they get more fees when they sell the property. It is especially bad in non judicial states like AZ.

    More details that Washington Needs to hear and media report on:

    Folks all over the U.S. who qualify are being rejected and homes have even reportedly been sold even within days after being told foreclosure sales would be delayed. Foreclosure notices are being sent at the same time the homeowner is told their modifications are being worked on. In my case, and many others we submit required documents for the HAMP Plan (and mortgage owned by Fannie Mae) and being told not to worry and wait until contacted by a “processor.” Instead they sent a foreclosure notice.

    If the servicer determines you are not eligible for a modification, it does not have to give any reason and can the next day sell your home with no notice, no time to take any action in a non-judicial foreclosure like typical in AZ, once the original 90 days has past.

    On 9/11/09 National Consumer Law center said “”Participating servicers violate the HAMP guidelines by selling homes at foreclosure while homeowners are negotiating loan modifications, requiring waivers of homeowner rights, and refusing to offer HAMP modifications to qualified borrowers. Lack of transparency in the application, review and turn down process exacerbates these problems.”

    Attorney Jeff Barens warns about this in article of 9/11/09 “BEWARE THE “END-RUN” (SNEAK) FORECLOSURE” article at It reports the widespread practice of servers telling customers not to worry about the foreclosure notice, messes up the paper work and trustee sale is completed!

    I have had a six month battle with CitiMortgage with lies, screwed up paperwork and at their mercy to not do a no notice instant sale upon their whim, when I should easily quality for a HAMP modification and have been told it was approved twice. There are many frantic people like me that will do anything to keep our homes. We are not even looking for principle reduction just the 31% of income mortgage under HAMP where we pass the Net Present Value test showing it is better to modify than a foreclosure sale. But some servicers are selling our homes without notice anyway.

    I have 9 pages of documented notes call by call in my six month battle with CitiMortgage to save my home showing the lies and failure to meet the Fannie Mae and HAMP directives. Even my Hope Now escalation team person is running into the same problems when she tried to set up a conference call but unable to get the right responsible person or call backs from supervisors. And CitiMortgage is reported as much easier to work with than many of the other servicers.

    That is why the great in design, HAMP program is not working in real life. Servicers are starting mods but not approving them in the end. They are hiring lots of staff to contact folks to get them into mods, but not enough people to actually solve problems and get those that successfully complete the trial period approved.

    The forum at often has 2000 visitors at once. Anyone can read on the forum details of so many frustrated home owners having so many problems with most servicers.The forum shows in the “real world” why the well designed HAMP program is failing due to massive servicer problems not the plan itself.


    Many of the reasons modifications are not going through it seems is not the servicers fault but Fannie/Freddie.

    Anyone that has had a foreclosure notice has to RESTART FROM SCRATCH the HAMP program per CitiMortage Thomas ID17742. He himself says he has to notify and redo HAMPS for 4000-5000 customers that just he as one person is assigned to.

    There is a post on about a week ago that seemed unbelievable that FANNIE was not authorizing any modifications. That seemed impossible but it turns out it may have been true.

    While at least a dozen times I have been told the Modification Agreement would be sent (was on the HAMP trial as of July) I never received any. The reason is FANNIE MAE (and also told Freddie Mac) will not set up mods if you are in foreclosure status.

    I am in foreclosure status since I was lied to being told not to send in updated financial info until I was contacted by a “processor” and everything looked in order. Than I got foreclosure notice.

    FANNIE MAE according to CitiMortgage will not allow you to get off of foreclosure status until the HAMP Mod is finalized. But they won’t send the paperwork to get on the HAMP Trial if you are in foreclosure status. Huh? Yep, if you’re in foreclosure it seems there is no way out.

    This despite many directives not to put anyone in foreclosure status before trying to qualify you for HAMP or other foreclosure alternatives.

    NOW supposedly Fannie Mae/Freddie just last week figured out this problem.

    Again according to the CitiMorgage person, I now am not on the HAMP Trial. This despite all the confirmations for last two months that I am and have made 2 trial payments. Being on the HAMP was confirmed to my Hope Now escalation team member on a conference call about a week ago. Now that has all changed for me and zillions of others with all servicers supposedly if loan owned by Fannie or Freddie (about 85% of all 1st mortgages are)

    In late September Fannie/Freddie figured out the mess and is saying HAMP’s can be restarted for those they would not start on HAMP because they were in foreclosure. I find no info on this on any public site or the efannie site but this is what Citi says.

    So now I am told I am restarted on a NEW HAMP TRIAL. What about my two prior trial payments? Checks with a supervisor and is told they will be credited to new just started HAMP trial.

    What about the foreclosure sale 10/26 which is my biggest concern?

    It seems it’s now a race. For about the 12th time, request to send me the Trial Mod paperwork is being sent to Fannie and within “up to 10 business days” (about 2 weeks) it will then be overnighted by UPS to me (as I’ve been told the same for months)

    I was told to get the forms back to them as fast as possible and they will try and race the clock to get it through all their review and verification process before the home is sold. How is this possible when you have to start the 3-month trial all over again?

    If they give credit for the prior 2 months in the trial the final date for me is 10/24, two days before my home is scheduled to be sold and I am totally at their mercy not to sell it

    This is totally incredible.

  2. Cindi Neisinger said:
    on October 2nd at 12:33 am

    I made my fourth payment to Chase (thinking I was on the Obama HAMP program) and when the underwriter Michele Lawrence reviewed it she said I was in deficit of $900.and laughed at me when I said that the payment plan was half of the payment she was proposing. I emailed Jamie Damion CEO of Chase and an rep. of his called me within a week and said not every one can fit into the Obama plan…She also said I wouldn’t qualify. I said according to the Obama Calculator I was at 31 percent of my income for the mortgage with the payment plan Chase put me on … I told her I wouldnt be making my 5th payment if I had two people from Chase telling me that it didnt look like i qualified …..What a scam! Shame on them! It seems from the forum I go to daily at no one is being given a perm. mod……God help us all ….Is anyone watching these Scalawags?

  3. Obama said:
    on October 2nd at 11:18 pm

    Sounds more like the hemp plan where everyone is smokin a bowl!

    Its no wonder that owners trash their homes when they leave. They are so pissed off that instead of killing their banker, they punch holes in the wall.

    Only the big players are getting the fat bailouts! Shame on our gov.

  4. Litton Loan 13851241 said:
    on January 10th at 11:26 am

    Litton Loan Servicing is telling people they are qualified for and getting a HAMP MODIFICATION, then they send similar looking modification, which is NOT a HAMP modification and require borrower to WAIVE RIGHTS, and they do NOT pay the PAST DUE TAXES, to make it current, SO you get an “affordable payment” for the first couple months and then they SLAM YOU WITH THE UNPAID BACK TAXES, which they pay and shake you down for, APART from the modification, instead of making it PART of what gets capitalized, as is permitted with the HAMP modification.
    They need the SWAT team to go SWAT them. Still won’t tell me if I was QUALIFIED FOR A HAMP WHY I NEVER GOT ONE?!!!

  5. Donna Kneeland said:
    on September 13th at 10:10 pm

    We have been in a trial Mod with Chase for 4 months. This week we received a Notice of Intent to Foreclose. I called Chase and the customer service person told me to disregard the notice. She told me to wait til I get the Permanent Mod papers. After reading all these posts I am terrified. Chase is just trying to get all the money they can and will foreclose anyway. This should be illegal. I have emailed the executive office of Chase. They helped us get the trial mod in the first place. I hope and pray that we will be approved for a permanent modification. However I am not very hopeful that it will happen. Can’t some government office help all these people who are being scammed.

  6. Tania Hernandez said:
    on September 16th at 01:43 pm

    I have been dealing with Chase since October 2009 when my mortgage was transferred to them from BofA. They lost my loan payments, were making monthly mortgage payments on my behalf (don’t know where the money was coming from), they messed up my escrow impound account and the list goes on. It took me close to 6 months to get the mess resolved before I can even start on a loan modification. I was denied at first then all of a sudden when I mentioned to them how many regulations they violated with my loan mess and that I was going to file a complaint with the OCC, I was approved (which I totally qualified for – my payments were well over the 31%) mmmm weird! I have since made my 3 trial mod payments and am now awaiting my permanent modification documents. In the meantime, I receive collection calls from them saying I am 60 days past due. Where are my payments going to?? Come to find out when you are in a trial period they put your monthly payments into a suspense account which triggers collections calls. Does anyone communicate with eachother at Chase??? Now they are supposably re-ordering an appraisal and asked me for all new updated financials and once the appraisal comes back everything will go to an underwriter for final approvalI. An approval is an approval and should be from the start. Lets see what f’n excuse they will come up now not to approve my modification. Its a waiting game and all they do is lie to you. I filed my 3rd complaint with their Executive Lending Department and am ready to go to the OCC with this. Enough is enough!!

  7. Jen said:
    on November 12th at 07:37 am

    have been in review for 2 yrs was finally offererd the trial mod based on full verifyed documention paystubs tax records ect. in december of 2009 signed mod agreement made 8 payments was told it was a matter of if but when congradulations I cried like a baby for hours with that same week july 27 got a letter of stating although we sucssesfully compelted the trial mod we failed the npv test that they reran GOD yoiu are right what country do we live in ? I`m at a loss my home is set to be sold feb 1st we are still fighting but it doesnt look good I built this house for my daughter who is disabled 5 yrs ago sold the family farm inveted everything we had now they want to give me 3000 for moving expences how thoughtful of them our credit is ruined we sold everything we had to keep going while being told there was help did all the right things followed all the rules had we only known the trial mods where just a collection tatic on the part of the banks until they had time to forclose my heart breaks for all the familys going through this I pray someone honest steps in and holods the banks accountable before more lose everything God Bless

  8. Jen said:
    on November 12th at 07:40 am

    I failed to mention the bank is the famous INDY MAC?ONE WEST. it was so nice for the goverment to bail them out so they could continue to abuse the American people

  9. alberto valdes said:
    on December 24th at 05:13 am

    Wells Fargo sends letter that I qualify for Hamp program. Takes out 3 trial payments electronically, plus I meke 4 more payments, while all along denying said Hamp program. Sold mortgage to MCMCAP. They tell me to stop making payments and must pay all monies due on mortgage. After getting Fannie Mae escalation involve, they are now asking for 7 months worth of Hamp payments and will then send me papers. I do not trust them.

  10. CarrieM said:
    on September 8th at 03:07 pm

    We called Citi in July of 2009. (we were current on our mortgage and had not missed any payments) My husband was going to be getting a paycut and we were trying to be proactive on what we could do before that happened. We asked Citi what we needed to do to stop escrowing. (Our yearly bonuses more than paid for homeowners insurance and property taxes), could we prepay a year, could we just pay the invoices ourselves, etc. Citi told us that it was a WI state law and that we had to escrow. (untrue, but did not know that)

    Citi told us that what we wanted was a loan modification and they would put us in that and that was the help we were looking for (sure, right) Of course, I had no idea what pandora?s box we had just opened. (no other options were ever presented or discussed with us.)

    Again, as they say hindsight is always 20/20, we had no idea what a modification was, but why would our mortgage company advise us to do something that could do harm to us or them?
    Citi told us the first trial payment would be in 2 months. So we should just pay the normal payments for 2 months and then the following month pay the trial payment we asked? Citi told us, no payments until the first trial payment. Again, why would we think our mortgage company would advise us to do something that would harm us? Wow – were we blind.

    We made about 9 TRIAL payments!!

    May of 2010 we were denied HAMP. BUT, we were told that was good news, we were actually back to Citi for a traditional modification. Again, no other options were mentioned or discussed with us. This is is what we wanted we were told.

    The next month we get a letter to call and make arrangements before foreclosure would start. Of course I called hysterical and was told as long as I was making monthly payments and in the modification process, Citi would not foreclose (haha). That is just a letter the computer sent out. We were not being foreclosed on.

    August 2010, Citi mysteriously loses my automatic monthly payment information, does not take my August payment and files foreclosure. What? But we are in the modification process? Now remember, this according to Citi and law, we are now 90 days passed due because we were instructed to not pay for 2 months which puts us automatically 60 days passed due. Now of course, we see what their true intentions are.

    We get served papers and file an answer. 2 weeks later we get offered a modification, my attorney calls their litigation department, and their local attorney (calls were not returned). Modification offer gets closed. (WHAT!)

    Another court date is scheduled for foreclosure. I finally got the contact in the ERU dept. Executive Response Unit at Citi and they rush and we get approved for another modification (But worse terms, only lowers interest .6% instead of 2% like previous offer (all income and bills were the same) we sign offer to get foreclosure case dismissed. (Not even going to mention the fees, interest, delinquency charges that were added to the principle of our loan)

    After 4 months of on time payments with the perm. modification, we get a letter from Freddie Mac that they do not approve of the modification?! and a letter from Citi to call to workout arrangements instead of foreclose (short sale, etc)

    So confused and no idea what is going to happen next. Just when you think everything is going to work out and you can breathe, it all comes crashing down again.

    Oh, and the week they filed foreclosure I had talked to Citi four times because they called me for more documents for our modification and never once mentioned the status of our account!!!