Tracy Davis and her husband were victims of such a case.  After meeting with a Bank of America representative on October 30^th, 2009, the Davis’ were told that they qualify for a loan modification under HAMP guidelines.  With the exception of a few calls from a collections center in India, they had not heard anything regarding their loan modification for the next four months.

The Home Affordable Mortgage Program was created in order to keep 3 to 4 million Americans in their homes.

“Federal Statistics show banks are making plenty of offers, but relatively few of those loan changes are being made permanent.”  (Berger 1)

In fact, out of roughly 1 million homeowners originally approved for HAMP, only 116,000 have had the new mortgage terms become permanent.  The most common occurrence is a trial period of payments that the lender outs the homeowner on.  The trial period of modified payments should only last for three months; however lenders are either requiring homeowners to continue making more trial payments after the scheduled 3 months, or are failing to communicate with the homeowners on a permanent modification all together after the trial period is completed.

Tracy Davis and her husband both had steady employment as of late 2006, but an unfortunate turn of events left them both laid off and looking for work.  Both took sporadic jobs here and there, and both eventually ended up working at a grocery store for about one third of their original pay.  With mortgage payments at $1000 per month, they continue to struggle to make their payments on time.  The Davis’ are just one example of the millions of families that are in similar situations.  These people need help, and here at KEL, we are dedicated to helping each client who comes to us in their time of need.

By Mary Shanklin Orlando Sentinel

January 16, 2010

William and Lida Negron don’t know the details of a $75 billion federal program designed to protect homeowners such as themselves from foreclosure.

The senior citizens know only that they have tried to get new terms for their mortgage but now face losing the southeast Orlando-area house they bought three years ago at the peak of the market.

“I was talking to my father yesterday,” said Carlos Negron, their son, “and he’s at the point where he’s about to turn in the house. He’s an elderly person, and it’s so much stress on him. … And my mother has been to the hospital twice because of this.”

The Negrons are among about 600,000 homeowners across the country who have hit a dead end with the trial mortgage modifications they received through the federal government’s Making Home Affordable program. Orlando had the 11th-highest rate of mortgage modifications of U.S. metro areas in December, with 15,516 homeowners in trial modifications and 1,400 who have permanent new mortgage terms, according to a new federal report released this week.

Here’s how the 10-month-old program is supposed to work: Banks reduce certain customers’ monthly mortgage payments, often by cutting the interest rates, for a three-month trial. If the homeowners make their payments on time, the banks are supposed to convert the temporary loan terms into long-term modifications, which may involve extending the 30-year loans’ terms to 40 years.

Treasury Department officials initially estimated that more than half of the trial deals would become permanent. But as of the end of October, fewer than 5 percent had been converted, according to a Congressional Oversight Panel’s report released last month.

“I’m not really sure why the banks are not making these modifications permanent,” said Matt Englett, of the Altamonte Springs law firm Kaufman, Englett and Lynd, which represents thousands of foreclosure cases. “We have a lot of clients who have met the criteria — they have gone through the three-month trial period, and now they’re just sitting and waiting. … Our take on this is: The taxpayers bailed out the banks, and now the banks are bailing on the taxpayers.”

Englett said his firm plans to file lawsuits against a half-dozen lenders that are not giving their customers a permanent solution even when those homeowners successfully complete their three-month trials.

Last month, the U.S. Treasury Department drew hundreds of local homeowners to a Making Home Affordable foreclosure-prevention workshop in Orlando, one of the top 10 metropolitan areas in the country for foreclosures. Participants met with a representative from their mortgage company to discuss getting a trial or a permanent mortgage modification.

One south Orange County man at the workshop said that, even though he had made timely payments for three months on his trial mortgage modification, he received a foreclosure notice Nov.19 on the home he had bought three years earlier for $156,000 in the giant Southchase development.

Reasons the trial modifications are not becoming permanent remain unclear. Treasury officials reported to the Congressional Oversight Panel in September that they would have more a more accurate assessment of the program by the end of March.

One issue, officials have said, is that homeowners sometimes do not file the paperwork necessary to make the loan changes permanent. Because of such hang-ups, the Treasury Department approved a two-month extension of the trial modifications launched before Sept.1, 2009. The program’s success rate improves to 38 percent for trial modifications converted within five months, as opposed to a 4.7 percent success rate for three-month trials.

For the Negrons, the terms their bank offered them for a permanent loan modification were untenable.

When the couple — who said they had near-perfect credit scores before William Negron lost his car-sales job about two years ago — got into a trial modification last year, it dropped their mortgage payment from $2,000 a month to $1,280 a month. But the permanent loan modification would have extended payments on the 30-year loan for 10 more years and would have required a $25,000 balloon payment in 15 years — when William Negron would be approaching his 90th birthday.

“That was a major slap in the face,” said Carlos Negron, the couple’s son. The Negrons own a second home, which they rent out for income.

Perhaps the larger problem facing the Negrons and thousands of other Central Florida homeowners at risk of defaulting on their mortgages is that they are struggling to stay current on houses now worth a fraction of what they paid for them several years ago. The Congressional Oversight Panel, created by lawmakers in 2008 at the height of the global financial crisis, criticized the Treasury program last month not only for being slow in converting trial loan modifications but also for not addressing the fact that 23 percent of all homeowners now owe more on their homes than the properties are worth.

Derrick Bennett, a Pine Hills homeowner stuck in a trial modification, has lost much of his income from detailing vehicles for auto dealers. He said he is struggling to pay his trial mortgage payment of about $1,200 a month, even though it’s down sharply from his old monthly payment of $2,000.

He said he paid $120,000 for his home 11 years ago but now sees similar houses down the street selling for less than $43,000. He has never missed a house payment, he said, but now it’s tough to know what to do.

“It would be hard to start over,” he said.

Mary Shanklin can be reached at 407-420-5538 or mshanklin@orlandosentinel.com.

Copyright © 2010, Orlando Sentinel.

One article that the AP released indicates that unemployment claims rose by 11,000 last week. Imagine that 11,000 new claims in one week.  That is a lot more than economist expected.

Another article that CNBC released was that foreclosures jumped 14% in the month of December. That is another clear indication that our great country is still not recovering.

If you are facing financial hardships whether it be a foreclosure or high credit card bills, KEL Attorneys can help.

Unemployment has brought both financial and emotional hardship on many families as the holidays grow near.  The jobless rate in America continues to remain at a steady 10% and improvements to the job market look to be far off in the distance.

At KEL Attorney’s, we experience the struggles of individuals first hand as they try to recover from their financial nightmares.  Though our government is taking measures to stay the many foreclosures, credit card defaults, and bankruptcies our clients face, we continue to strive to provide excellent representation for these individuals and their families in their time of need.

 KEL Attorney’s. Here when you need us.

Be sure to listen to Mr. Englett’s very own talk show, Under Oath, tonight at 6pm on WFLA 540am in Central Florida.  If you live outside of the central Florida area, you may listen to the program live on our website.  Matt fields listeners calls, and would be happy to take calls from out of state listeners in addition to local callers.  If you have questions regarding foreclosure defense, bankruptcy, credit card debt, or IRS tax debt, please feel free to call the show toll free at 866-916-5400.

As a result of new political discussions with congress and the senate, the Obama administration will outline new efforts designed to increase the number of borrowers who receive mortgage relief. This is positive news for homeowners who have been affected by the recent economic downturn.  

KEL attorneys have seen hundreds of cases in which borrowers are given forbearance agreements by their lender in the hopes of receiving a permanent modification of their mortgage.  These agreements can range from three to six months, and typically include a lower monthly payment with no real contractual obligation on the part of the lender to modify the loan once the forbearance term is over.  These agreements differ from trial loan modification plans.  When a borrower agrees to a trial modification from their lender, the payment is lowered to something the borrower can afford for a certain period of time, usually three to five months, whereby the loan is then permanently modified if the payments in the trial plan are made as agreed between the lender and the borrower.

KEL has also seen some of the tactics used by lenders to choose which borrowers they wish to help and which borrowers they wish to foreclose on.  This is normally based on a profit and loss scenario, and greatly undermines the effort our government has taken to relieve troubled homeowners.  

We hope the recent and upcoming efforts taken by our government will strengthen efforts to help troubled homeowners, but we also encourage our clients to take the first steps if they wish to save their home.  If you are falling behind on your mortgage or if you are facing foreclosure, do not hesitate to contact a reputable law firm such as KEL for advice on how you can fight back and save what you have worked so hard to gain.