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Thursday, December 9, 2010

Mortgage Modification Keeps Hope Alive for Struggling Homeowners

Mortgage Modification Keeps Hope Alive for Struggling Homeowners
By Mary Ellen Podmolik Print Article
RISMEDIA, December 8, 2010—(MCT)—This holiday season will be a happy one in the Bellwood, Ill., home that Rogelio Huerta and Maria Soto share with their two young sons. That’s because the couple recently made the first mortgage payment on a permanent loan modification that will keep the family in the home they expected to lose to foreclosure just two months ago.

The Chicago Tribune profiled the family and the predicament they faced in late October as an example of how homeowners who follow the rules and try to regain their financial footing were nevertheless being thwarted.

Huerta and Soto applied for and received a trial modification from PNC Mortgage early in the fall of 2009. But two months ago, the family was rejected for a permanent modification because during more than a year that their application was in limbo, the family managed to save $2,500—too much, in PNC’s view.

Had PNC responded in a more timely manner, or if the family had spent some savings, they would have met the criteria for a permanent loan modification. Huerta and Soto said they were following the advice of housing counselors to build up savings.

Two days after the story ran, the Northwest Side Housing Center, the housing counseling agency that worked with the family, received a phone call from a PNC representative, offering the family an in-house permanent modification.

But there has been no phone call or letter to the family apologizing for the drawn-out process or explaining the lender’s change of heart. Huerta doesn’t expect one.

“Maybe the mail guy sent an apology to a different house,” joked Huerta, who just a few weeks ago had trouble keeping his composure while talking about his situation.

Another set of numbers, on loan modifications made through the federal government’s Home Affordable Modification Program, shows a program struggling to gain traction. As of October 2010, while almost 1.4 million trial modifications were begun since the program’s start, only 483,342 of them, or 34.6%, had been converted to permanent mortgage modifications. Meanwhile, 41% of consumers in canceled HAMP trials received alternative modification programs from lenders themselves.

Counselors at the Northwest Side Housing Center are heartened by Huerta and Soto’s success. But like others who spend their day advocating for homeowners, they worry about the people whose good-intentioned efforts still come up short.

“Servicers were never set up to make modifications,” said Liz Caton, director of counseling services at the Northwest Side Housing Center. “They were set up to make loans and collect payments, but that’s not an excuse, not for the billions of dollars that taxpayers gave them two years ago,” said Caton. “There is a canyon that a bunch of people are falling through, not even a crack, and I don’t see good faith efforts by some of these lenders to fix that chasm.”

Huerta’s final package took time to negotiate; the final agreement will keep the monthly mortgage payment at a level similar to the trial payment for the next 40 years, at a slowly escalating interest rate.

Their family’s story struck a chord with many readers. Some asked how they could assist the family, financially and in other ways, and several contributed funds to a bank account set up for them by the counseling agency. Meanwhile, a local window installer contacted the family and, free of charge, replaced a broken window at their home that Huerta was afraid to spend the funds to fix. Huerta had also held back on car repairs to build up savings.

Huerta had sought the loan modification because a job relocation meant higher commuting expenses and his hours were cut.

Huerta, who said he was stunned by the level of support he received, plans to continue attending homeowner meetings at the housing counseling agency, where people offer each other support and advice in dealing with their mortgage issues.

“There’s a lot less stress now that I know I can keep a home for my family,” Huerta said. “There’s homeowners who have nothing yet. I want to share what happened to me, and for them to keep the faith.”

(c) 2010, Chicago Tribune.

Have you had a challenging experience with your lender that you would like to share?

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