Mortgage Modification Results in Payments Cut in Half?
The Weber’s first came to see us in September of last year regarding their $152,000 mortgage. They ran into trouble making their monthly payments of $808 because Mrs. Weber lost her job about a year earlier. At that time, their bank actually advised them to stop making payments. Despite this advice, the Weber’s continued on making payments, but were running 3-4 months past due. Even so, their bank had not yet filed foreclosure at that point. Importantly, however, their bank also had not seriously reviewed
them under the Home Affordable Modification Program (HAMP), a violation of their rights under federal law.
This last indiscretion by the Weber’s bank is extremely common in our experience, and is what we call a “false HAMP denial”. As is now being generally recognized in the national media, in this day and age of securitized lending, where loans are bundled by the thousands in a loan pool or trust, foreclosure is profitable for banks. That is why false HAMP denials are so prevalent – the banks make more money through foreclosure than they are paid by the government for granting homeowners HAMP relief. And the real national shame of HAMP, as well as other mortgage relief program or law? The government is nowhere to be found in enforcing its own laws against the banks. Thus, like the Weber’s, if you are a homeowner with a troubled mortgage, you must enforce the laws meant to protect you yourself!
And boy are the Weber’s glad they eventually did receive a foreclosure complaint. Rather than roll over, play dead and not resist the bank’s effort to take their home away, instead they fight back. We did so by raising a number of defenses in the court action, one of the primary one’s being the bank’s misconduct in illegally refusing to allow the Weber’s to qualify for HAMP. The “stick-to-it” paid off in a big way.
Consider the before and after modification terms of the Weber’s loan for yourself:
Old Loan Terms New Loan Terms
Interest Payment: $808.00 $416.00
Interest Rate: 3.75% ARM 2% step rate
Loan Balance: $152,000.00 $132,000.00
Thus at least in part, the Weber’s were compensated for being victimized by their bank. After being in their home for more than a year without making a payment, the monthly payment was cut in half and $20,000 was knocked off their loan balance.Are you a victim of bank fraud?
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Kate Eyster and Lauren McGookey contributed to this article.