Help from President Obama is on the way for homeowners facing foreclosure in Miami and South Florida. The Obama administration is fighting to get Banks and mortgage companies to act with urgency on loan modifications. Most recently, executives from 25 mortgage companies pledged to reach a new goal of about 500,000 loan modifications by Nov. 1, 2009. However, this falls far short of Obama’s original goal of modifying loans for up to 4 million borrowers.
The plan is not without its problems. Many Miami and South Florida Homeowners and their attorneys complain the process of loan modifications is a bureaucratic nightmare. Many say the mortgage companies are doing things the plan plainly prohibits. Many borrowers are hit with upfront fees and given confusing information. There are long delays in the loan modification process which does not stop all lenders from moving forward with the foreclosure process in Court.
There are many reasons why this program is problematic. The loan servicers have hired thousands of new employees who must be trained on new operating procedures. Hundreds of investors have purchased the mortgage-backed securities and many have different rules on how to modify a loan. Not to mention the fact that thousands of borrowers call every day trying to modify their loans.
As of July 2009, the loan modification program has only about 200,000 borrowers enrolled. They were given trial modifications requiring they may timely payments for three months before a permanent modification is approved. The loan servicers are paid $4,500 for every modified loan once the homeowner makes on-time payments for three months. Almost 170,000 borrowers were denied a modification, but the Loan servicers refused to state why they denied the homeowner’s application. That is another problem, that the reason for these decisions are not made public and there is no appeals process.