I don’t even know what to say about this kind of moral blindness:
A federal watchdog reported Monday that the Obama administration’s signature anti-foreclosure program sometimes causes people to lose their homes to foreclosure — a conclusion that had already been reached by some homeowners and their advocates.
The Treasury Department, which administers the Home Affordable Modification Program, did not respond to that claim in its answer to the watchdog’s report. But a Treasury official told HuffPost on Tuesday that no one who is current on their mortgage payments can become delinquent because of a HAMP modification.
Consumer advocates heartily disagree.
“Treasury’s wrong about that,” said Diane Thompson, a lawyer with the National Consumer Law Center. “Everybody comes out of the trial modification period owing more than they did when they went in, and everybody comes out with their credit worse.”
This is just a truism based on the Treasury Department’s own design for HAMP. Every trial modification payment reads as a default to the credit reporting companies. The Treasury Department could have set it up so that didn’t happen; they chose not to intervene in that reality. All of the money between the trial modification and the original payment that borrowers don’t pay during their trial period gets tacked on as part of the unpaid principal balance at the end. The servicers also tack on late fees. Treasury could have banned that. They chose not to intervene. The servicers can proceed with foreclosure operations during the trial period, arguing that the borrower is in default. They can’t actually foreclose (also in some cases they have). But they can go through the legal process. Treasury could have put a stop to that. They didn’t. Borrowers keep getting told they have to miss a payment to be eligible for HAMP. Treasury actually didn’t put that into the design. But they haven’t sanctioned a single servicer for this or any other violation of the program guidelines. They could have done something. They didn’t. [cont’d.]
What has happened, over and over, and this is well-documented not just by me but by numerous people who have looked at this, is that people make all their payments in trial modification, get stretched out for six months or more when the trial period is supposed to only last three months, and then get denied for a permanent mod for whatever reason (usually the servicer doesn’t give one). At that point, the borrower gets hit with a demand payment for the difference between the trial payment and the original payment, and tacked-on fees. The servicer wants that immediately or they will foreclose. And they carry through on that threat frequently, because the borrower doesn’t have the money accumulated over those many months to make in a lump sum – that’s why they sought a modification in the first place. Therefore, you have someone current on their payments getting foreclosed upon. It happens all the time.
Bank of America staffers repeatedly told Troy Taliancich, for instance, that he he was seriously delinquent because of his reduced HAMP trial payments, but that he should continue to make the reduced payments anyway. Eventually, the bank stopped accepting his payments altogether because he was in foreclosure. Even as he was making the trial payments the bank told him to make, it turned out, the arrears and fees piled up. “I was only a payment behind when I first called,” he said. “I could overcome one payment amount if I had known.”
Treasury chose this program. They chose its design. They don’t get to blind themselves to the consequences.
By the way, this coward wouldn’t even allow the reporter, Arthur Delaney, to quote him by name. Small wonder as to why.