Changes to Loan Modification Policies

After numerous complaints by homeowner’s struggling to be compensated or have their loans modified pursuant to the $25 million national mortgage foreclosure settlement, the settlement’s monitoring committee finally announced some changes last week.  It turns out there are a whopping 304 standards that the banks are supposed to be following, but compliance has been slim

Pursuant to the changes announced last week, all five banks affected by the settlement (Bank of American, JP Morgan Chase, Citigroup, Wells Fargo and Ally/GMAC), will give homeowners 60 days to submit additional loan modification documents before the home goes into foreclosure.  Generally, the banks have also stated they will provide better oversight of their employees.

Additionally, Bank of America and Wells Fargo have agreed to the following additional policies:  1) They will have to provide specific information about missing documentation to homeowners.  For example, instead of saying they never received “X document”, or “X document” is missing, they will have to specify if the document was received but is defective for some reason (i.e. it’s not completely filled out, it’s not signed, it’s not dated, etc.); 2) They will escalate the application of any borrower who has repeatedly been requested to submit the same paperwork; and 3) They will create an online system to communicate directly with housing counseling agencies.