Foreclosure Stories: Why HAMP is a total failure

Anonymous
Jul 5, 2012

This is a weekly column by Sandusky attorney Dan McGookey, devoted to telling true stories of homeowners who have been victimized by a lending system which makes it profitable to foreclose. The names used have been changed for privacy purposes. This is Bob and Mary's Tale.

By everyone’s account, the federal initiative to provide financially-distressed homeowners mortgage relief, HAMP, (Home Affordable Modification Program), passed four years ago by Congress, is a total, abject failure.

I believe the reason for this utter failure is revealed in the story of Bob and Mary.

As age and health problems set in, Bob and Mary, both in their sixties, struggled to keep up with the monthly payments on their $150,000 mortgage. To make matters worse, their payments, originally around $1,200 a month including taxes and insurance, shot up to almost $2,300 under their adjustable rate mortgage.

With their income decreasing and their mortgage payments increasing, Bob and Mary reached out to their bank for help in the way of a modification of their mortgage, only to receive a foreclosure complaint instead. Bob and Mary then sought the help of McGookey Law Offices. We questioned the bank’s right to foreclose and succeeded in getting it to retreat and dismiss that case.

Undeterred however, the bank charged right back and filed a second foreclosure complaint, seeking to kick the couple out of their home. At no time did the bank ever offer them relief on the mortgage, which would have allowed them to stay in their home.

An analysis of Bob and Mary’s income and mortgage payment proved they should have been offered a loan modification through HAMP, as they obviously qualified for the program. As Bob and Mary struggled with the concept of losing their home, finally a modification was offered. (It is interesting to note that for over a year they had been told they did not.) Unfortunately the modification required monthly payments of $1,150, which albeit half of what they were paying at one point, was still beyond Bob and Mary’s ability to pay and considerably greater than called for under HAMP. Thus, we continued to press on.

Just recently, our efforts paid off in a big way for Bob and Mary. Within the last two weeks they were offered a trial loan modification (the prelude to a permanent modification) calling for payments of $730 a month, less than a third of what they were once paying. Thus, it is safe to say that Bob and Mary will be in their home for as long as they want to be there.

Ultimately, Bob and Mary’s story illustrates a phenomenon which should be a national shame to our great country – all the well-meaning government programs designed to provide homeowners with mortgage relief are not worth the paper they’re written on -- so long as it is left to the banks to effectuate them.

This is true because, in the totally corrupt world of loan securitization, a world in which your bank does not own your loan and is in reality not your bank (i.e. your lender) at all, foreclosure pays. It is because of this painful reality that Bob and Mary had to needlessly endure two years of their lives not knowing whether they were going to be able to keep their home.

Tragically, Bob and Mary’s story is repeated with thousands of American homeowners every day across the country. And the beat goes on…

Note from the author: If you have questions or comments regarding this or any Foreclosure Story article, please visit www.mcgookeylaw.com.

Next week: An analysis of the Hardest Hit mortgage relief program, which like HAMP, has been an unmitigated disaster.

Copyright 2012 Daniel L. McGookey