Mortgage modifications were supposed to save the day.
They promised to keep homeowners in their homes despite the housing crash of the Great Recession.
To some extent that has worked.
Or at least mortgage modifications spread the failures out over time so that the market wasn’t glutted with foreclosed properties.
But anyone who has attempted a mortgage modification knows first hand the frustration of submitting an application to the servicer.
Over and over, the servicer claims that you haven’t sent the documents, or the documents are stale or incomplete.
That inability to account for documents is, I’m afraid, just a sneak-peak at the next mortgage horror:
Servicers have no records about the loans they did modify.
Or, more precisely, the records they have are not to be trusted.
The hundred grand mistake
I saw the first instance of this nightmare this week when my client’s request for a loan payoff in connection with a sale.
The loan had been modified some five years ago, with the result that a sizable hunk of the amount due when the loan was modified was due only upon sale.
Asked for a payoff, the servicer returned a payoff that failed to include some $127,000 of non interest bearing principal.