The Making Home Affordable mortgage loan modification program was started in early 2009 to help homeowners keep away from foreclosure. It is intended to support mortgage modification, mortgage refinancing along with other affordable home choices for homeowners stuck in mortgages they cannot pay. This program, however, has been running into steady problems with lenders. The settlement the Bank of America reached with the FTC concerning Countrywide’s lending practices just serve to highlight the lending practices.
The lending methods of Countrywide
Countrywide lending has been accused of deceitful lending practices. In June of 2008, Bank of America purchased Countrywide in a $ 4 billion stock deal. The FTC has reached an agreement with Bank of America that will cost the company $ 108 million. That restitution funds will be split between the mortgage holders that Countrywide illegitimately charged, as outlined by the FTC.
Complaints to the Making Home Affordable mortgage modification program
The Making Home Affordable federal mortgage program is implemented through private lenders. The government provides support and guarantees, while private lenders are required to comply with federal recommendations and qualifications for mortgage loan modification. According to one of the most recent report from the Making Home Affordable Call Center, more than 31,000 callers in February of 2010 alleged that lenders weren’t complying with Making Home Affordable guidelines. 103,762 homes defaulting on their loans in just April, this means approximately 38 percent of borrowers seeking mortgage modification are finding lenders they believe aren’t complying with federal guidelines.
What are the alleged deceptive practices?
While Countrywide is the first lender to be charged for these alleged deceptive practices, there are other lenders being investigated. You will find some investigators who think that Countrywide’s violations are minor within the world of mortgage lending. Most commonly, the four practices that the FTC is targeting lenders for are:
- Requiring the homeowner to pay fees and fines they’re not responsible for
- Adding extra to fees and charges intentionally
- Not complying with basic industry polices, such as providing recorded proof that the lender holds the mortgage
Citations
MortgageLoan.com
RealtyTrac.com
financialstability.gov
