New York Times Story on Difficulty of Getting Mortgage Modification Hurts Forward and Reverse Industry

An article in The New York Times over the weekend highlighted the importance of good borrower publicity—and the damage that one bad test case can do. With the Obama Administration’s Making Home Affordable Plan coming under increased scrutiny, the newspaper profiled the case of a woman with good credit who, after losing her high-paying marketing job at the height of the recession, began to struggle with her mortgage payments. She was never late on her payments, but as her savings began to dwindle and her credit card debt increased, she sought help from a housing counselor who advised her to participate in the program and began seeking a loan modification from her lender, Washington Mutual (which had been purchased by JP Morgan Chase).

However, after making her trial payments on time for five months, the woman is back at the beginning. Why she is back there is debatable through a series of “he said, she said,” in the article. The bank appears to have been concerned about her income, but with a new job paying her $100,000/year, this seems to not be an issue. The phone tag, difficulty getting to the proper person, receipt of conflicting information, and mounds of paperwork certainly could not have helped. She was reported to credit agencies and threatened foreclosure while making her agreed upon lower payments through the trial modifications.

Clearly, this woman’s story may not have been the norm. But in an industry that receives more bad press than good, stories such as this one continue to be damaging. Chase is made out to be the “bad guy,” and the reader feels sympathy for this woman who is simply trying to make her payments on time.

While every case is different, the forward and reverse mortgage industries must keep an eye out for stories like these, and do their best to avoid them. It seems obvious, but a story like this can hurt the forward industry, the Making Home Affordable program, and even the reverse industry. The banks are not all bad and most loan officers really do want to help their clients stay in their homes. But stories and cases such as this one can drive away people who could really benefit from these programs and the expertise of those in the industry.