Hey gang, came across this on CNBC's site just now. Basically, Bank of America's 'credit loss mitigation strategy' guy says that about 60%+ of all those mortgage modifications are going to bupkis. Why? 

Mr. Schakett told me that of the 65 thousand trial modifications set to expire Dec. 31st with B of A, a full two thirds of the borrowers, while current on their payments, have not submitted the full documentation required to turn a trial mod permanent under the HAMP guidelines.

"We don't really know the major reason why the customers are not returning the documentation," Schakett claims. Well I can tell you why (and I'm sure he knows this too). The trial modification process only requires oral verification of income to begin, but to go permanent, you need to prove your income, submit your tax returns, and basically come clean with all your finances. I'm guessing a lot of folks who took out their initial loans with false or non-existent documentation, aren't eager to let the government know that.

- excerpt from "Bank of America: 2/3 of Borrowers May Lose Mods", copyright 2009, CNBC.

Now I trained to be a mortgage broker at one point in my life. My uncle knew I was fluent in Spanish and wanted to me in an operation he had going here in Cook County. Sitting there basically I learned if the prospect just inhaled and exhaled, they qualified for a mortgage. 

A lot of folks, in my opinion were complicite in this. You had a lot of loaners who honestly didn't qualify for the mortgage. You had a lot of dealers who disregarded reality to make a fast commission check. And last but not least, you had a lot of banks who simply wanted to make book who could've been the firewall. Add to this all the Tupli-mania surrounding REI back in the decade, and well you get the idea.  But now all the chickens have come home to roost.

Folks who took advantage of these modifications had to face very little challenges.  As noted in the article, all one had to do was say they had the money/income to make the payments.  Now the banks want the proof on paper.  Uh oh!  

But it would be easy to dismiss the borrower as the suspicious one and the lender as the victim.  The report noted what a friend of mine going through the same thing told me, the banks are also dropping the ball helping out. Now my friend, she's not a bum just having a hard time, got one of these modifications. She's faxed in the paperwork, even visited her bank with extra copies.  Guess what, the bank is playing screw up as well!

Let me just say that I get a lot of email from borrowers, telling me that the banks are holding up their paperwork, losing faxes, messing up modifications and leaving those borrowers in the lurch.

- excerpt from "Bank of America: 2/3 of Borrowers May Lose Mods", copyright 2009, CNBC

 

Still, if you got an offer to re-do your mortgage, on better terms, I say take it. If you lied on your paperwork, your options aren't that good.