Here is a tale of woe. The story is true but the names and the city will remain unnamed.
Three years ago, a couple, we will call them, Mr and Mrs. Jones, bought a house, at a modest price, and financed it with 20% down payment. Both Mr. and Mrs. Jones had jobs and they had no trouble paying the $1100 a month mortgage payment.
In March of 2009, Mr. Jones was laid off. Mrs. Jones was furloughed from her job as a pilot. They were expecting their first child.
Mr. Jones called Wells Fargo in April of 2009 to apply for a loan modification that had been written about in about every newspaper in the country. Banks had received bail out money and the government had instructed them to modify loans to avoid foreclosures. The people were waiting.
Mr. and Mrs. Jones applied for and received unemployment benefits. All their information was given to Wells Fargo Bank. They were told that the bank would be in touch. After three months passed with no word from the bank, Mr. Jones called to inquire. He was told that they did not qualify for the first program but that they should submit more information and the bank would see what other program would apply. They were never told what each program was. This happened again three months later.
Now, we are nine months down the line. Mr. Jones called the bank and was told they wanted all the information again since it had become out of date and that they had no idea when they would be hearing from them.
While Mr. and Mrs. Jones are making the payments and are never late, the bank does nothing. If they stop making the payments the bank will change the interest rate for five months and if they make these payments on time, the bank will consider remodification. If they don’t modify the loan on a permanent basis, the Jones’ will owe the bank the difference between the original payment and the reduced payment.
THIS DOES NOT HELP PEOPLE! THIS IS NOT AVOIDING FORECLOSURE! The banks must be compelled to comply with the wishes of the U.S. government. Congress must enforce the conditions under which the banks received bail out money. The road to hell was paved with good intentions.