“Trial Period” Loan Modifications are Just Another Scam

I’ve been hearing rumblings lately about how many people are easily getting into “trial period” loan modifications and the occasional articles about it. My contact at a California law firm tells me that it’s easy to get qualified for a trial loan modification under the HAMP program. This is a good thing initially, but what happens when your trial period is up?

Apparently nothing.

I’ve never thought loan modifications were a good idea. They are a band aid on a much bigger problem: the massive scam that has been perpetrated on Americans through securitization and all the lies the banking industry had to tell in order to make the entire scheme work in their favor.

For awhile, loan modifications were the only option a lot of homeowners had because there was not a lot of information available to them about how to fight foreclosure, or lawyers who could intelligently represent them. Our elected officials still lag behind the rest of us in understanding what’s going on, but that’s not surprising. And I know that a lot of you just wanted a modification with a house payment you can afford, and I understand that too.

The problem is that loan modifications aren’t working. As I’ve mentioned before, HAMP doesn’t have any legal teeth, and since the government didn’t attach strings to the bailout money they received, the banks don’t have a legal duty to modify anything unless it’s a federally backed mortgage.

And now, people are in trial period modifications, making payments as required, yet the lenders aren’t permanently modifying their loans.

Trial period loan modifications are just another scam on us by our government and the lending industry to get as much money out of us now that they can’t make any more loans. They have to figure out a way to keep those massive profits coming.

Don’t be fooled, America: this is just another invention by the banks to scam you.

That’s why it’s so easy to qualify! They don’t do any underwriting before allowing you to get into the program. Isn’t bad underwriting part of the reason we got into this mess in the first place?

They know you’ll keep paying to save your home, and so far, it’s working. They’ll keep you in the trial period as long as they can to keep taking your money. When you get tired of paying into a trial loan mod and stop paying on your house, they’ll foreclose on you and you’ll kick yourself for not keeping your money in your pocket for something they were just going to foreclose on anyway.

I just can’t see how this mess isn’t going to turn into one massive pile of litigation. If our lawmakers are going to tie the hands of homeowners to keep them from getting legal representation for loan modifications or create laws that don’t force the banks to modify loans or respond to a short sale offer, what else can they do besides file a lawsuit?

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