KANSAS CITY, Missouri - New rules are kicking in to speed up the loan modification process. Will this be good news or bad news for those hoping to save their home from foreclosure?
From blooming flowers to radiantly colored birds, the signs of spring are blossoming in Anne Anderson's backyard.
"There's no place I'd rather be than here," Anderson explained.
It's a different story out front. Here you'll see signs of the times like foreclosed and vacant homes. Anderson lives in Ruskin Hills which has been hit hard by the foreclosure crisis.
Anderson worries she'll lose her home next.
"I'm discouraged," Anderson explained.
Anderson expected to have a permanent modification by now. Bank of America reduced her payments for three months, but that payment plan was supposed to end two months ago.
Anderson has no idea "if" her payments will be permanently reduced.
Anderson is hardly alone. Call for action has repeatedly reported on this issue throughout the process. We helped two Wells Fargo customers save hundreds of dollars a month. They called for action in the summer of 2009, after hearing nothing about getting into the program. After our calls, they were placed in trial modifications and several months after their trial was supposed to end we helped them again. This time, their loans were permanently modified.
ProPublica crunches the numbers
"Treasury has said some of the backlog is due to the fact that they have asked the banks to check their denials of homeowners to make sure they are correct. At this point, I think it's fair to say the main reason is the capacity of the banks to modify," ProPublica writer Paul Kiel said.
ProPublica is an independent non-profit watchdog group that works with the media. Journalist Paul Kiel has analyzed the latest national data and talked with hundreds of homeowners across the country.
He's says he's seen some trial modifications last a year. That's four times longer than expected.
"The longer you are in the trial the longer it dings your credit," Kiel explained.
The extensions are hurting consumers at a time when they need help. ProPublica also questions the math .
"It's not transparent so there is no way to know the bank is doing the calculation correctly. I've heard government officials say the banks have made mistakes when doing the formula," Kiel said. "You're at the mercy of the bank as to whether they do this correctly."
The delays and lack of transparency leaves homeowners like Anderson seeing red.
"Now I'm farther behind," Anderson said.
This is not Anderson's first attempt to get help. After falling a month behind, she says she got a forbearance agreement that allowed her to miss a few payments. She still needed help after that and says that's when she started the modification. Plus, she's not paying the full amount with the trial payments.
Everyday that passes without an answer, Anderson grows more worried. In a letter several months ago, a Bank of America Customer Advocate wrote, " Please note that workout assistance is not guaranteed and is dependent on several factors. Our preference is to help customers keep their property, make regular payments and build equity."
Bank of America told Call For Action it has a representative working on this case. Their goal is to make sure this loan gets into the underwriting process if its not already there. This will confirm whether the loan can be permanently modified. They blame the backlog on demand and documentation issues.
The big question is -- why doesn't the Treasury enforce the penalties built into this program?
"Treasury does have ethe ability to zap the banks if they think they are not following the guidelines for the program," Kiel explained. "If they said no we're not going to give you that money they run the risk of the bank potentially dropping out of the program. If Bank of America or Chase would drop out of the program that would be a substantial number of people who would no longer be eligible for help. There's a lot of people that say they essentially a handcuffed themselves form any effective enforcement."
There is also concern these new rules to streamline the process and get paperwork in advance of qualifying for the trial modification will shift the backlog. Now, the trials may not last longer than three months but it may be harder to get approved for a trial.
"We're right smack dab in the middle of this crisis. We're by no means at the end of it. This is something that's going to be a problem for awhile," Kiel said. "I think a lot of the problems are with us unless there is significant change to the structure of the program."
Free help this week
There will be a FREE workshop this Wednesday, May 26, at the Kansas City Convention Center (301 W. 13th Street - KCMO). The event runs from 1-7:30 p.m. and will give you the opportunity to meet with your mortgage servicer or a free HUD housing counselor.
We've had many of these HUD counselors here at NBC Action News during our Save Your Home