Homeowners are in a race with the foreclosure clock. Often many lose. Loan modifications on the most delinquent borrowers are not being done in time to save their homes. Blogs and newspapers are filled with desperate stories. Some are sprinkled with success. But the question is are lenders, participating in HAMP, “cherry picking” loan modifications? Emails sent to one borrower, suggest, yes.
Meet Mr Davis(name changed for privacy), a typical product of the recession. He purchased a home back in 2007. He did not have a second mortgage, no equity lines, no debt, other than his mortgage, which was equal to 1 1/2 times his paycheck. Fast forward now to current. Laid off from his job, but able to acquire another one at less pay,Mr. Davis attempted a loan modification in March of 2009. At the time his lender, IndyMac, told him they could not modify unless he “fell behind.” So, unhappily he did. Like most homeowners attempting this process, papers were faxed, re-faxed and triple re-faxed. He was told back in July 2009, “no additional paperwork was needed and you are in review.” At the same time, Mr. Davis, was sending payments on his mortgage, as the IndyMac Representative told him, “better to send in something than nothing.” 2 weeks later, a foreclosure notice was sent. He was shocked. He then called IndyMac, who stated, “pay up or leave.”
Mr. Davis, said by the help of family members, he got the loan current. Later, a letter showed up from IndyMac, stating, that the loan modification was denied based on HAMP’s requirements of the lender following the service agreement between them and the investor. Mr. Davis decided to contact Mr. John Olinski, at IndyMac. The response suggest that IndyMac, who had adopted the Department of Treasury HAMP, Home Affordable Modification Program on August 11, 2009, may have be practicing, “cherry picking” on loan modifications.
According to the HAMP’s modification process, stated on www.makinghomeaffordable.gov, “mortgage servicers are prevented from “cherry picking” which loans to modify in a manner that might deny assistance to borrowers at greatest risk of foreclosure.”
Mr. Davis, requested a clarification as to why his loan mod was denied. Mr. Olinski, responded by having, Alisha Bender, a escalation specialist at IndyMac Mortgage Services, a division of OneWest Bank, contact Mr. Davis. In her email she stated, “..your loan modification was denied as you were no longer past due. Based on your servicing agreement with IndyMac Mortgage Services and your Trustee we cannot modify current loans.” Mr. Davis then responded,”You attempted to foreclose on my home, was that not delinquent enough? So if I fall behind again you can give me a loan modification?.” He then copied Mr. Olinski on the email. That is when it got interesting. Mr. Olinski, of IndyMac responded, ” We are obligated to follow our servicing contracts, which can differ among various investors….the servicing agreement that pertains to your loan, allows the Bank to modify only seriously delinquent loans.…we are required to follow the government’s rules or expose the Bank to liability.
If Mr. Olinski and Ms. Alisha Bender’s statement is true, why is IndyMac not following its obligation to the HAMP program and its servicing agreement? Based on the information provided by IndyMac, the guidelines of HAMP, and the status that Mr. Davis’s loan had maintained, one wonders, why the loan, which was seriously delinquent, was not even considered for a modification? Mr. Davis was never contacted by IndyMac regarding his modification until the denial letter, after he got it current. Is IndyMac practicing, “cherry picking?”
Mr. Davis, feels that he is left no choice but to play the game that IndyMac is setting the rules for. “The sad thing, is that I did everything right. I didn’t buy outside of my means. My family and I are very budget conscious. I am not asking for a handout. I committed to my mortgage for 30 years, not 3. My intention was to live most if not the rest of my life in this house. My income potential is slowly getting better, but I am fighting the clock against trying to maintain my home. IndyMac can never give you a straight answer. Sadly, I will have to fall behind in order to try for another loan mod. IndyMac seems to be enjoying the benefits of HAMP but not playing by the rules of it.”
If the Treasury Department, Congress and Obama want success in the HAMP program, it is going to have to clamp down harder on these lenders, who are not playing by the rules after receiving and continuing to receive taxpayer funds. The banks have been bailed out with billions of dollars, are currently being compensated through HAMP for the “cash for keys” and “short sales” programs, are being matched dollar for dollar on reductions of DTI from 38% to 31% and are receiving funds for modifying loans. How much more greed and deceit can there be on the blood and sweat of the American taxpayer?