Anyway, my point is that I've spent much of the last couple days on Thanksgiving prep, moving at my own pace, doing what I want, when I want, and I have to say, being mostly disconnected from what's going on in the world is pretty relaxing - no wonder this is how most people live!

If I had any advice for Velma Hart, it would be, "stay away from HAMP unless you want to ruin your credit and increase your risk of losing your home."  David Dayen at FDL has had an ongoing series on HAMP and the foreclusure mess, and the beginning of the end for a lot of people - too many people - has been the advice of servicers to stop paying on the mortgage so they can "qualify."  Servicers have - no surprise - figured out how to game the program to maximize their take, mostly to the detriment of people like Hart, who aren't yet in default, but are looking for some relief.

I wanted to resurrect the Portrait of HAMP Failure series because of an interesting data point on HAMP modifications I recently came across. First, our story, which is so depressingly normal for a borrower seeking help with HAMP that it can almost be seen as a template. Todd Karwowski of South Plainfield, New Jersey, wrote in to tell me his story.

He first applied for a HAMP modification with Chase Home Finance in May of 2009, 18 months ago. He was approved for the 90-day trial period after being told not to pay his mortgage for two months to qualify for the program (this is just not true, and it's a servicer-driven default that is a violation of not just HAMP guidelines but many state laws). Karwowski received a trial modification that lowered his payment by about $500 (which is the average reduction). At the end of the 90-day trial, he asked Chase about the outcome, and they just him to keep paying the reduced rate. This went on for 17 months, as Karwowski, who works for an electrical supply company, kept paying his modified payment and updating his income statements.

Here comes the bait and switch: Chase told Karwowski in a demand letter, after denying him a permanent modification, to either pay $14,000 to reinstate the loan, or to go on a "repayment plan" to pay it back. The only other alternative would be foreclosure. So the goal was to push borrowers into some sort of alternative payment schedule, if not to take the home.

Now, as dday points out, most people who start with HAMP don't lose their homes, but they do end up in private modification programs which is more to the benefit of the servicer than if the homeowner had been accepted into HAMP:

The big bank servicers basically push the borrowers up against the wall, demanding immediate payment, foreclosure, or some alternative modification scenario. The alternative mod is attractive to the servicers, especially if they tack their late fees or principal forbearance onto the unpaid principal balance. This jacks up their servicer fees, which are a percentage of unpaid principal balance. They get to put the borrower in a less-attractive alternative mod, which has no transparency or safeguards, and could easily be another predatory lending scenario. The private mods are far less generous than HAMP mods, and expose the borrower to a far greater potential for default. As banks have learned how to navigate the HAMP system and use it for their own ends, this has become the default mode. 147,000 borrowers received modifications last month, only 28,000 through HAMP.

This conflicts with the claims from the banks that borrowers in delinquency are "deadbeats" who would surely have to give up their homes no matter what. In fact, these people are desperate to keep those homes, and often find a way to do so, accepting whatever modification they can. And for the most part, they've stayed current on those modifications. The point is that a legitimate government program for loan modifications would be successful and not result in mass defaults. As it is, many borrowers get shuffled off into these private modifications, and are probably getting abused by them.

The Velma Harts of the world, who so badly want to believe in the president, and this program he created, cannot imagine it could do them more harm than good, are just sitting ducks for mortgage servicers concerned only with their own bottom line.

other House members were wheeling & dealing w/the WH to get something for their districts in exchange for their NAFTA vote

not Maria

Eventually one hits a tipping point, where things are no longer an aberration.