Trial loan modifications are the way banks stretch out the process and pretend to be helping the borrower, when in reality they are killing your credit rating.
We have been trying to get a loan modification from our lender, Citimortgage for over two years. Citi is, of course, one of the "too big to fail" banks that we bailed out, and who are now reporting $3.0 billion in profits.
We bought our house in 1999, did some work on it and refinanced in 2002. In 2003 my husband was diagnosed with cancer. He underwent an surgery and returned to work. Six months later his employer (of 10 years) laid him off. Since then he has had another surgery and although he has finally returned to work, it is a lower paying job with no health care benefits.
My job does provide health insurance, but there is no employer match, so we pay $1200 per month. Yearly expenses are minimally $1200 for a CT scan and $400 for one dr visit. (We pay the first $3500 in out-of-pocket).
So our medical expenses are pretty high, but mortgage holders are not required to take these costs into account when they figure out if you qualify for a modification. So even if they do approve us, our gross income (about US median) means a mod of $1500 per month, which is what we are currently paying.
We have tried four times over the past two years. I can't even begin to detail how insane the process is. Lost paper work, no one able to give us an answer, and now finally this week we got two letters from Citi, one said, "Sorry you've been denied." The other said, "You have been approved for a trial 3 month loan modification of $1343."
Trial loan modifications are the way banksters stretch out the process and pretend to be helping the borrower, when in reality they are killing your credit rating. Because when you go on these trail modification plans, where you pay less, they still charge you late fees for the amount you are not paying, and accrue interest and fines each month. These are reported to credit agencies. So even if we could possibly get out from under our house, our credit rating has been ruined.
We can't sell the house, because, well you try to sell in this market. We're about $20-30,000 short.
The banks have no incentive to modify your loan because they already got paid. We bailed them out, remember? They get that money and they get to resell your house.
Please spread stories like this. It's the unseen crisis, and no one wants to talk about it. Homeowners don't want to because you feel like a complete jerk if you tell people you can't make your house payment and you're going to be foreclosed on. There is a huge stigma.
But there are many, many people in our situation. And no one talks about it. We are part of the 99%