ABC News Investigative Reporter Brian Ross Reports How
Difficult The Process Is For Homeowners To Contact Lenders
When Trying To Negotiate A Loan Modification. Congresswoman
Maxine Waters (D - CA) Decided To  Call Lenders On Behalf of Her
Constituents, to See For Herself How Difficult The Process Really Is.

Massachusetts and Connecticut Loan Modification Process

As I have repeatedly warned, trying to obtain a loan modificiation is basically a waste of time. See this chart produced by ProPublica, which is an organization that is monitoring the "progress" of the Government's Bailout Program.

What most people do not realize is that the servicer of your note and mortgage has a direct financial interest in keeping you in a default status and under the threat of foreclosure. Because your note and mortgage was "securitized" the parties involved in the securitization process were required to file a Prospectus, Prospectus Supplement, and a Pooling and Servicing Agreement with the Securities and Exchange Commission.

The Prospectus contains a general description of the security (i.e. the pool that your note and mortgage are contained in), a Prospectus Supplement, which provides specific details related to the specific trust that your note and mortgage is in, and the Pooling and Servicing Agreement (PSA) is the specific contract between the indivdual entities that are involved in the particular securitization of your note and mortgage.

Having read many   PSA's, I can state with certainty that mortgage servicers have a significant financial interest in taking the ownership of your home away from you. Some interesting tidbits include these facts:

Mortgage Servicer

A mortgage servicer collects the monthly payments and interacts with the homeowner on the owner of the mortgage's behalf. The
servicer holds monies in escrow to pay the property taxes and homeowner's insurance. The servicer also negotiates any repayment
or loss mitigation plan with a defaulting homeowner, or hires a foreclosure attorney if necessary.

When a mortgage is assigned upon sale in the secondary market, the mortgages are generally serviced by a bank or servicing
company. The servicer may be the original lender if it retained servicing rights when it sold the loan.

There are typically three types of mortgage servicers:

• The master servicer - oversees the servicing operations, but the homeowner is unlikely to have much contact with the
  master servicer
  
• The subservicer - generally the entity that collects payments and maintains the borrower's escrow accounts.
  
• The special servicer - entities that are generally authorized to engage in loss mitigation and if that fails, foreclose on the loan.
  

Subservicers and special servicers may in turn contract with tax service providers, insurance providers, foreclosure and bankruptcy attorneys, inspection services, and other similar parties to perform different functions in the loan servicing process.

When a Mortgage Servicer is Unresponsive to a Workout Plan

When a mortgage servicer is unresponsive to a workout proposal, it is due to the fact that they have a direct financial interest in denying your loan modification, because the particular secuitized trust that your note and mortgage theoretically is in, has an agreement in place that allows the servicer to potentially auction off your house and retain most or all of the proceeds. The servicer also receives all of the money from borrowers monthly mortgage payments, then directs where the investment of these monies are placed. A key feature of this part of the arrangement is that the servicer gets to keep any interest of investment gains made on these funds. The bottom line is that the servicer is making an incredible amount of money to keep you in a default status and under the threat of foreclosure.

Before you consider attempting to modify your loan with the "bank" (who does not even own your note), you should review the abissmal acceptance rate for final modifications under President Obama's highly publicized (but highly ineffective) HAMP Program. Nationwide, only a little over 4% of homeowners have received finalapproval, though many receive a trial modification (in order to drain additional money from borrowers before foreclosing on them).

ProPublica is an organization that has put together a great website detailing this charade by the Government, which in my opinion was done only to avert mass panic, and as a tip of the cap to Wall Street and its "investors". Specifically relevant to the discussion here ProPublica has put together the list of mortgage servicers that participated in the Government's HAMP program to modify homeowners mortgages, see Eye on Loan

THEREFORE SPENDING TIME AND EFFORT TRYING TO OBTAIN A LOAN MODIFICATION IS BASICALLY A WASTE OF TIME

Some of the information obove is taken from the NCLC manual Foreclosures, Defenses, Workouts, and Mortgage Servicing 2nd Ed. (2007)