For Loan Modification, Don’t Fall Behind

You don't have to become delinquent to get help

foreclosure2When Jamie Arthur heard about President Barack Obama’s Making Home Affordable plan, a sense of relief overcame the Pennsylvania resident. While she wasn’t in foreclosure, the unemployed homeowner feared she would fall behind on her mortgage payments.

But when Arthur contacted her lender she says because she was current on her payments, she was told she did not qualify for loan modification.

“They said call us back at the end of the summer,” Arthur said.

Arthur was one of many to attend a predatory lending session at the NAACP 100th Annual Convention in New York City Tuesday afternoon.  She was also one of several people who said they were told to fall behind on their mortgage payments to qualify for loan modification.

“If anybody receives information from a lender, loan consultant, realtor, or any sources telling them they need to miss a mortgage payment in order to qualify for modification, it’s false,” says Janis Bowdler, deputy director of the Wealth-Building Policy Project at the National Council of La Raza.

Bowdler says the complexity of foreclosure prevention programs combined with inadequate training of staffers may account for the misinformation.

“In other more nefarious cases, it’s because [companies] are trying to triage the work, and they’re not going to help you unless you’re worse case scenario,” Bowdler says.

She reminded attendees that  financial institutions participating in the Making Home Affordable program are not allowed to tell borrowers they need to fall behind.

“If they’re not signed up for that program, they’re kind of allowed to do whatever they want. But they should still be reported because it is unfair treatment,” Bowlder says.

Click here to find out if your lending institution has signed up for the Making Home Affordable program.

Bowdler urged Arthur to report her lender to the Treasury Department and have a housing counselor call back the financial institution on her behalf.

If you are told you need to miss payments in order to modify your loans you should:

Seek out a loan counselor. Visit the Department of Housing and Urban Development for more information finding a housing counselor.

Report the lender to the Treasury Department. You can call their hotline (1-800-359-3898), mail or fax your complaint, or file anonymously or confidentially.

Renita Burns is the editorial assistant for

5 Responses to For Loan Modification, Don’t Fall Behind

  1. Lon Howell says:

    I just wanted to comment stating that I adamantly agree that it is difficult to obtain a loan modification or refinance in todays market because I have four investment properties (2 which have ARMS) since 2005 and I have never missed a payment on any mortgage on each property and also my credit score was 808 and without any debt besides mortgages. I am a Teacher Asst. at an Alternative High School since 2008 I obtained MS degree in 2003 in Organizational Leadership after 9 years at a Fortune 500 financial institution. I have no credit card debt, car loan or student loans, with this criteria and finding difficulty getting help in my situation from lenders with it seems guidelines change so frequently.

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