NPR’s Planet Money Blog has an article today about mortgage modifications and bank’s reticence to make mods to bad loans. Frankly, this doesn’t surprise me at all, even though they’ve been given tons of cash for these modifications.
I’m guessing that many of the people who are delinquent are delinquent because they shouldn’t have had loans in the first place and the modifications are unlikely to change the foundational financial reasons behind these loan failures. So, maybe the banks are now living by a bit more reasonable standard than they were in the past.
I don’t really have a problem with that, although I do feel badly for those who were sold houses and loans when they shouldn’t have been sold those houses or loans in the first place.
What I do have a problem with is this: In the interest of taking advantage of lower rates and repairing what I still consider a banking bait and switch when we knocked down and rebuilt our house, I have called my bank to see about combining the two loans they made me take out after construction was complete into the one mortgage it should have been in the first place. (Long and boring story, but in short, I was told at the time of construction that I could take out a construction loan for one amount and close on my final mortgage for the total amount of construction. Note to self, next time get it in writing.) The short answer from the bank is that I don’t qualify and I don’t qualify because I’m current on my payments and neither loan has been sold to FannieMae or FreddieMac.
Frustrating, but true. And frustrating because I’m willing to take the hit on the decreased value of my home to gain the benefit the single conventional loan I should have had in the first place.