Subscribe to RSSThis is going to hurt me, more than its going to hurt you. Making Homes Affordable Program Part III
For those of us that had the privileged of spankings as a kid probably remember their parent saying something like “this is going to hurt me more than its going to hurt you”. This of course wasn’t entirely true however there is some solace in hearing those words. This phrase sprang to my mind when I realized that I was about to bend over and take my proverbial spanking from the bank and be grateful for it.
After months of calling weekly, checking the website and waiting patiently we finally got word that we were approved for the Making Homes Affordable program. What was advertised as being a 45-60 day process turned into well over 120 days. Thankfully we are very mindful of our finances and were able to keep up with our monthly responsibilities. I do however recognize and feel a great burden on those who are in a more dire situation than ours and had to wait as long as we did. Part of me believes that the banks are purposely taking their sweet time deciding on the fates of these families in hopes that they become delinquent on their loans and thus become ineligible for the Making Homes Affordable program.
We quickly looked over the documentation and were very happy to see that Wells Fargo/Freddie Mac had tentatively modified our loan by almost $500 a month. I say “tentatively” because there is a 3 month trial period to ensure you make your payments, comply with any other request like talking with a credit counselor and the bank can review your updated financials during this time to make sure you still qualify. All the information seemed straight forward and was like a burden had been lifted.
BUT, if it seems too good to be true, it probably is.
Every page of the 23 page packet emphasized that we were on a time line and had less than a week to accept the offer. Naturally, I was eager to sign and see the benefits of our lower mortgage payment. I started reading through the fine print to make sure we did everything correctly so we weren’t hindering the process. On a page titled “important programing info” it highlights how the program works and at the bottom of the page the final bullet read:
“CREDIT REPORTING. During the trial period, we will report your loan as delinquent to the credit reporting agencies even if you make your trial period payments on time. However, after your load is modified, we will only report the loan as delinquent if the modified payment is not received in a timely manner.”
This made my blood boil! In order to qualify for the Making Homes Affordable program you could NOT be delinquent but now that we were approved, we would HAVE to be delinquent in order to get our mortgage modified. Essentially this is what was going to happen. Let’s just say our original mortgage was for $2000 a month. For the trial period they asked that we pay $1500 and even if we pay the $1500 on time and complete, we would be reported to the credit agency’s as delinquent because our current mortgage is still at $2000 a month.
I called the number provided so that I could ask a few questions and make sure I was reading this clear. The Wells Fargo representative indicated I was correct in my assumption and if I attempted to pay the difference so that our payment wouldn’t be delinquent they would not approve us for the mortgage modification. She said “would you like 3 months of hurting your credit score or 27 years of lowering your mortgage payment”. She also said that if we did not agree to the terms and have the paper work back by September 1st we would never have to opportunity to apply for the Making Homes Affordable program again.
I then call Equifax credit agency and ask what they would 3 months of reporting “delinquent” do to our credit rating. He indicated this would affect our credit rating and could drop our rating as much as 100 points. A drop in credit score like this could be financial suicide.
Three years ago we bought a house we could afford and got a traditional 30 year fix loan. We paid 25% down and were very comfortable with our financial situation. Now, our house has depreciated almost 30%, we are down one income and we can’t qualify for a traditional refinance because of the value of our home and the state of the economy. The offer from Wells Fargo/Freddi Mac is essentially black mail but like many others we are at their mercy. We will more than likely agree to the offer on the table but I don’t have to like it and I certainly won’t be quiet about it.
It is clear to me that the banks don’t want to use this government funded program to help people keep their homes. If they did then, there would be more than only 9% of all people that have applied for this government funded program being approved. And for that sorry 9%, they will ruin their credit, lock them in a loan they will never get out of because no other bank will approve of a loan recipient that has been delinquent on a mortgage loan.
On the upside, if you own any Wells Fargo stock you will be happy to know that it is on the rise…
Want to read more:
Making Homes Affordable Program: First Hand Experience
How To Get 2% Interest Rate on 30 Year Mortgage
http://www.financialstability.gov/
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