Who do you have to kill to get a Loan Modification around here?

You listen to all of the advertisements hawking the ease and benefits of a loan modification, in this the aftermath of what has to be the most stupid of all home-buying generations…and not to give away my age but I was in CA in the 80′s.  Okay, in high school, but still did everyone forget the S&L scandals? (I don’t remember them, but I remember the devastation they wrought.)

So, we learned a lesson then right? WRONG!  We made an even bigger mess this time with our “American Dream”.  Now, I know that this is news to no-one but there is one question that I truly would love to have anyone answer for me…and that is who do you have to kill or anything else to get a Loan Modification these days? Seriously?

I have clients who have come to me with a common story that I believed what just simply miscommunication between them and their banker…UNTIL

That’s right.  It happened to a member of my own family.  Now, I know that many people look at the declining values of their homes and decide “hey, I don’t want to pay this amount anymore so I am going to ask for a loan modification”.  That is not what loan modifications were intended for and understandably I can see where the banks would be vigilant when granting this.  However, this was not the case with my Daddy.

My daddy is one of the all-time great guys.  I know little girls always think that, but he really is.  And he and his wife have always been very responsible and they were living the “American Dream”. Then about 4 years ago, right in the middle of the storm, my little brother (almost 40 now, but still my baby bro) got cancer.  He is fine now, but he went through all of the awful stuff you go through.  My parents helped emotionally, financially and every other way that a parent would.  He got back on his feet, back to his good job and is doing well again, but remember what I spoke of in an earlier post about medical bills.

So, we are thinking “whew” close but everyone still on their feet.  My daddy had a good but very physical job and about a year after my brother I get a call from my sister that my daddy has had a stroke on the job.  Now, before you think the worst, he got medical help immediately and he is doing great, but he can no longer do that very physical job he did.  His company is wonderful, he has been there approximately 25 years, but now he is behind a desk.  With that came a severe reduction in wages not to mention the time off from the stroke itself.

Okay, so they are still making their payments.  They have lived in their house for almost 15 years, made dozens of improvements, love the area, but because of both my brother’s and my daddy’s illnesses, they are just barely making ends meet.

So they listen to the advertisements about how easy it is to get a loan modification and they go to their bank C#^$E and meet with their banker to discuss a loan modification.  They are immediately told that they can’t have one until they are at least 2 payments behind (seriously someone told them that).  This is so against my daddy’s nature that it is almost physically painful, but this is what they are told to do, by the bank no less.  Then after those 2 months they are given paperwork for which they have to hire a u-haul to take it home and start supplying to the bank, papers going back to and including grade school report cards and the family tree for at least 6 generations (he’s from AR, that part didn’t take long).  All of the other crap paperwork takes approximately 6 months during which they are given a “temporary payment amount” (have you seen this little piece of b.s.?) which they pay, then at the end of that 6 months they are denied because they were making the payments up until the time they were told to stop.  I feel like Alice down the rabbit hole.  Anybody else think this is insanity?

I am seriously about to have a stroke writing this.  Of all of the stupid, moronic, boneheaded, etc, etc people the banking institutions are by far right at the top.

Now, their credit is crap (dropped nearly 100 pts).  Why you ask?  Well, 2 missed payments will be harsh, but it was the 6 months of the temporary payments that the bank told them to make!!!! Because it wasn’t the full payment from the original amount they just simply counted it as late.

Now the bank now has an empty house that can’t be bought for what the loan could have been modified for.  You had a buyer with 15 years in the home without missing a payment until you told them to you boneheads, and you have ruined their credit so that they can’t get a loan through you again.  The home was eventually sold through a short-sale, but had it sat any longer I don’t know what the outcome would have been.

 

Courtesy of DeAnne West