The folks at ProPublica recently looked into the all-too-common problem of homeowners who thought they had successfully run through the loan modification gauntlet only to later find out that their bank had no record of the reduction and their house was suddenly in foreclosure.
There’s the story of one Oregon homeowner with a Chase mortgage who had agreed to a modification last July. She says that, months later, she got a letter from the bank saying her modification had been rejected, followed one month later by a foreclosure notice.
It got worse:
After months of trying to figure out what was happening, she was offered a new modification, the terms of which were identical to the one she’d signed — except for the addition of over $8,000 to the balance of her loan. Understandably, she turned it down. But after having made every payment on her modification for nearly a year, the foreclosure notices continue to arrive.
Only after ProPublica spoke to Chase did the bank decide to honor her original modification and change the loan’s status to “current.”
As we recently reported, banks are under pressure from Freddie Mac/Fannie Mae and federal regulators to iron out the problems with their loan modification procedures. One of the bigger points is the creation of an single point of contact for each modification applicant, which should — at least in theory — help homeowners navigate through the loan mod labyrinth more easily.
Profiles: Shoddy Bank Practices Continue Even After Mortgage Mods [ProPublica.org]