Loan Modification Help Center- Home Loan Modification Help

Carrington Mortgage Services is following orders given by the Obama Administration to speed up the processing time for home loan modifications. In fact, they’re processing modifications at double the speed of some other loan servicers. The caveat for homeowners, however, can be summed up by the saying, “Be careful what you wish for.” According to recent quotes and articles from the Wall Street Journal and Forbes the company may be doing loan modifications, just not the kind that were envisioned by government officials or that work for their intended recipients; the homeowners.
According to Amherst Securities Group, a small broker-dealer specializing in the trading of mortgage-backed securities, “In most Carrington modifications, the firm tacks the unpaid amount onto the loan balance and makes little or no change in the interest rate paid by the homeowner. Carrington has used the same approach to modify hundreds of loans for the second or third time after the borrower has fallen behind on the first modification.”
While the benefits of loan modifications to homeowners are being questioned, the benefits to both Carrington and its parent company, Carrington Capital Management LLC, are undeniable. According to Forbes, “Unlike most servicers and lenders, which risk losing money on modifications, Carrington Mortgage Chief Executive Bruce Rose makes money every time the firm reworks a loan. This is because his Greenwich, Conn.-based hedge fund, Carrington Capital, owns many of the risky “first-loss” pieces of the mortgage securities his servicer collects on. These subordinate investments are designed in such a way that Rose continues to collect interest payments as long as a mortgage is considered current, even through a modification, and is cut off when a home is sold.”
Carrington also tacked on attorney’s fees and other charges to their modifications while adding unpaid balances to the modified loans. According to Robert Hart, Ohio assistant attorney general, it wasn’t unusual for the servicer to “…increase loan balances by $15,000 or more as part of a loan modification, basically setting the consumer up for a future default.” Last month, Ohio Attorney General Richard Cordray filed a lawsuit in common pleas court in Franklin County, Ohio, alleging that Carrington Mortgage Services failed to offer reasonable loan modifications to borrowers, it takes advantage of borrowers, forcing them to sign loan modifications without letting them see a copy first, and charges “unearned and unwarranted” fees for bogus workouts.
According to counselors at ACORN Housing, a nonprofit that tries to prevent foreclosures, Carrington regularly processed loan modifications with terms which were much more onerous that what was available. Citing a case involving a Brooklyn homeowner, Carrington executed a loan modification which reduced the monthly payment to $2,800. Had the servicer given the homeowner the loan they qualified for under the Obama administration’s Home Affordable Modification program, they could have been set up with a fixed payment of $1,600 a month for 30 years.
So far, Carrington has put 597 of its borrowers into loan modifications along administration supported guidelines on a trial basis, out of 14,000 mortgages which are eligible, according to a recent Treasury report. Meanwhile, the subprime servicer has been processing their own version of loan modifications, like the one it gave to the Brooklyn homeowner at a speed that would make anyone pressing for faster modifications proud.
At issue is the fact that the vast majority of the loan modifications that Carrington does benefit the borrower to a small degree while Carrington rakes in fees and charges while putting homeowners in a position where they will need to modify their loan again, generating a new batch of fees. By having a role in both the front end of a mortgage as a servicer and the back end as an investor through its hedge fund, Carrington can play each mortgage modification to maximum benefit with their borrowers coming in a distant third. They have accomplished all this while receiving $195 million in taxpayer backed incentives for their participation in Making Home Affordable.
While what is going on at Carrington may be much more involved than what is going on with other servicers, Bruce Dorpalen, director of ACORN Housing, says many of the four million borrowers, 12% of all Americans with mortgages, who modified loans during last two years received modifications which  were not designed to work out in the long run. In a recent study by the Federal Reserve Bank of Boston, well over 90% of the modifications in the study did not lower payments and, in many cases actually raised them.
It’s for these reasons that homeowners in need of home loan modifications are going to be much better served by retaining an experienced attorney to negotiate on their behalf. The issue for many borrowers is that they are unfamiliar with the nuances of what can and cannot be negotiated while also being unaware of the modification terms for which they can qualify. While trying to save money negotiating their own modifications they end up with unsatisfactory terms, exorbitant fees from the servicer, and a loan that is designed to fail because the new payments are too high to be sustainable.
Instead of just accepting these sub-standard conditions an experienced loan modification attorney will have a clear picture on attainable objectives in the negotiation with a servicer or lender. Getting the most out of a loan modification the first around is not only the most efficient use of everyone’s time, by removing the threat of foreclosure the quality of life for struggling homeowners can improve dramatically. Add in the savings in fees, lowered payments, possible principle reductions and the combination of peace of mind with a solid investment is a tough one to beat.