The Making Home Affordable Modification Program is a federal government program started in early 2009 as a reaction to the foreclosure crisis. . This program, however, has been running into steady problems with lenders. Bank of America’s recent settlement of a Countrywide lawsuit highlights mortgage industry practices that could be undermining economic recovery from the beginning.
Bank of America settles federal charges against Countrywide
Countrywide lending has been accused of deceptive lending practices. In June of 2008, Bank of America purchased Countrywide in a $ 4 billion stock deal. Bank of America and also the FTC have reached a $ 108 million agreement where BoA will pay restitution without acknowledging any wrongdoing on the part of Countrywide. That restitution money could be split between the mortgage holders that Countrywide illegitimately charged, according to the FTC.
Complaints to the Making Home Affordable mortgage modification program
Private lenders are responsible for administering much of the Making Home Affordable AT mortgage program. The private lenders must comply with federal guidelines, but they get federal support and guarantees for mortgages. In just one month this year, the Making Home Affordable call center fielded over thirty thousand calls that lenders are not complying with federal 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.
Alleged deceitful mortgage lending tactics
While Countrywide will be the first lender to be charged for these alleged deceptive practices, there are other lenders being investigated. There are some investigators who believe that Countrywide’s violations are minor in the world of mortgage lending. Some most common deceptive practices in the industry include:
- Requiring the homeowner to pay fees and fines they are not responsible for
- Overstating the total amount on a home loan, therefore extending payments
- Adding extra to fees and charges intentionally
- Not complying with industry regulations
More details on this topic
MortgageLoan.com
RealtyTrac.com
financialstability.gov
