President Obama introduced HAMP (Home Affordable Modification Program) and MHA (Making Home Affordable) over a year ago in order to help struggling homeowners stay in their homes. Seventy-nine billion dollars was allocated for this project. During the past year few homes have been saved through HAMP modifications, not because homeowners didn't qualify, but because servicers were not adhering to the contracts they signed with Treasury. A "servicer" is a company that is hired by the lender to collect the money each month and pay the expenses associated with the property.
Under that HAMP/MHA program any servicer that wanted to participate in the program had to sign a contract with Treasury stated that it would follow guidelines established by Treasury in order to help the homeowner. However, few servicers have followed the guidelines established by the Treasury.
One of the key provisions of HAMP/MHA was requirement that servicers not initiate any new foreclosures nor proceed to sale in an already filed foreclosure pending a modification review. I want the reader to think about the irony of the situation.
You pay taxes. You purchased a home with an "exotic" mortgage that was touted as the new way to purchase a home because you could buy more home for less money. The banks, brokers, and all sorts of lenders opened their doors wide and invited you to sign on the dotted line for a financial commitment that was doomed to failure. However, the banks, brokers, and lenders didn't explain this to you nor do they care whether you failed or succeeded in paying the mortgage. After all, they all sold their mortgages to Wall Street for significant profit.
Many of these banks, brokers, and lenders have long since vanished. Those that remained had to be bailed out through TARP (Troubled Asset Relief Fund) money and later helped by the stimulus package. However, instead of using the stimulus money to rewrite loans and help you stay in your home, the financial institutions use the money for other purposes and proceeded to aggressively foreclose on properties. I started this explanation by saying that you pay taxes. I did this for a reason. You, through your taxes, are giving money to these financial institutions to foreclose on your property.
What can be done to prevent a sale of your home pending the modification process? You can ask the court to stay any schedule sale of your property pending the modification review. Some courts are sympathetic to this while other courts will allow the sale to go through. File exceptions to the sale. If you want a unique approach, sue the servicer for breach of the contract it signed with Treasury.
But I'm getting ahead of myself. Those topics are for future articles. For now, just understand that it is improper for the servicer to proceed with a foreclosure while your HAMP application is being considered.
