Saturday, January 23, 2010

Paco Ahlgren, "Mortgage Modification? Yeah, Right."

"Mortgage Modification? Yeah, Right."
by Paco Ahlgren

"For months, I’ve been hearing all measures of horror stories regarding Obama’s so-called “Home Affordable Modification Program” (HAMP). The purpose of the program was to provide $75 billion to subsidize lenders who discharged mortgage loan modifiications for troubled debt — through interest rate reductions, loan repayment extentions, and/or principle deferrals for up to five years. The program was also supposed to restructure other related mortgage loan conditions in order to stop foreclosures. Big surprise: apparently the program isn’t working out.

News stories abound regarding the failure of lenders to modify mortgage loans in meaningful numbers –discrediting the Obama administration, and causing a lot of people (like me, for instance) to question just what the hell all the government is so much currency if loans aren’t going to be made?

Just so you’ll have a frame of reference, HAMP’s original purpose was to help 4 million Americans with home loan mortgage refinance. So far, the program has contributed to only about 66,000 people successfully refinancing their mortgages. As I’ve mentioned so many times before, the United States government has committed itself to almost $13 trillion in programs like HAMP since 2008. And that money is earmarked for this economic crisis, alone. $13 trillion is nearly impossible to understand, and now it’s not even doing what it’s supposed to!

I’ve talked a lot about the impending collapse of the dollar in the last year — about quantitative easing, and the flagrant governmental irresponsibility in battling this economic crisis. it’s not hard to figure out that I am vehemently — indeed rabidly – opposed to government intervention. But if the government insists on getting involved, then it better do a bang-up job, right? Right.

Today, I decided to do a little home-grown “investigative research,” and I started with a quick Internet search, which landed at a site called Nothing too impressive, except that if you leave your contact information, “…one of [their] WOWVerified™ loan modification specialists will present and explain all of your mortgage modification options…”

What the hell is a “WOWverified loan modification specialist?” It sounds just sexy enough to get me thinking that this Obama character might not merely be a cult of personality du jour; maybe he really does represent the new generation of hip. I mean, if it’s “WOWverified,” right? But then I started thinking about other fancy titles I’ve come across in recent years, like “sanitation engineer,” (garbage person), “cocaine derivative consumption expert” (crack addict), and “sexual satisfaction maven,” (prostitute).

Suddenly, talking to a “Wow verified loan modification specialist” didn’t seem so sexy. Nonetheless, my Geraldo gene was still throbbing, and it wasn’t going to be easily squelched. And then, I had a brilliant idea: what if I just called my mortgage company and tried to get a modification? I mean, why not, right? I pulled out my latest statement from Bank of America — née Countrywide — and dialed the number.

Then the recordings began. Why is it that every time I listen to a female-corporate-recording-voice, a notion of the proverbial Homeric siren hangs in my mind like the vague stench of a sewage treatment facility? This particular rendition was of the “just enter OR speak your answer” variety. Speak my answer? Yeah. How likely is it that speaking my sixteen-digit account number is going to be correctly translated by her feeble computer mind? To top everything off, she just wouldn’t listen.

Her: “For a summary of your year-end tax information, press one, or simply say ’summary.’ To make a payment, press two, or say ‘payment.’ To hear your options again, press three, or say ‘options.’” Her voice had the sickly-sweet potency of arsenic.
Me: “Customer service.”
Her: “I think you asked for a representative. Unfortunately, hold times for customer service are often very long, and I can probably help you. Would you like to hear your options again?
Me: “Customer service.”
Her: “I can’t be more emphatic: we have very few customer service representatives. They are all from India, so they don’t speak English well. They hate American homeowners. And they are all baby-eating vampires. I really think you might want to hear your options again.”
Me: “Customer service.”
Her: “Why won’t you just listen to your options again?”
Me: “Customer service.”
Her: “Fine. Hold please.”

And hold I did. For about forty-five minutes. Listening to an infinite loop of William Tell’s 1812 Overture. That wasn’t maddening at all.

Finally the line clicked. “Hello, my name is Horace. How can I help you?”
“Hi Horace,” I said. “I’d like a loan modification.”
Horace didn’t say anything for a few seconds. Finally he broke the silence. “Uh huh.”
Now it was my turn to be silent. Finally, I said, “Horace?”
“Uh huh?”
“Can I get a loan modification?”
“That depends.”
More silence. “On what?”
“If you qualify.”
“And how can I find out if I qualify?” I politely asked.
Horace sighed. Really audibly. “Have you had a change in financial circumstances? Do you have a hardship?”
I thought about that about that for a moment, and I decided unemployment would be a perfect response. “I lost my job, Horace.”
“Uh huh. Do you have any income?”
I thought about it again. Of course I don’t have income, right? Otherwise, why would I want a modification? “No.”
“What are you living off of then?” Horace asked.
“Um, savings?”
I heard a few clicks of a keyboard. “Uh huh. Does your wife have any money?”
“No. I’m not married.”
“Uh huh. Okay. Do you have verifiable income?”
“I don’t have income, Horace. I lost my job.”
“Uh huh. You won’t qualify if you don’t have income.”
Clearly I had to re-think my strategy. “Okay, Horace, look. It’s not that I don’t have any income. It’s just that I’m self-employed.”
“What do you do?”
“I’m a… uh… web-designer. Yeah. And I just don’t know when I’m going to get paid next. Times are tough, you know?”
“Uh huh. Well you need verifiable income.”
“What would constitute ‘verifiable income,” Horace?”
“Pay stubs.”
“I’m self-employed. I don’t have pay stubs.”
“Uh huh. Then three months of consistent income exceeding 31% of your mortgage payment.”
“Hold on, Horace. What if it’s less than 31% of the mortgage payment?”
“You won’t qualify.”
“But I’m broke, Horace. That’s why I need a modification.”
“Uh huh. I don’t make the rules.”
“Well how do I prove that I have three months of consistent income?”
“Bank statements.”
“Okay, I can get you those.”
“I thought you said you was broke.”
“I misspoke, Horace.”
“Well, you don’t have no income now, so you won’t qualify.”
“Horace, I’m self-employed. I’m just between clients.”
“Uh huh. Someone in the household is gonna have to have verifiable income.”
“I can get you bank statements, Horace.”
“But you don’t have no current income.”
“How about Social Security and a pension, Horace. Will that work?”
“It says here you was born in 1968. How do you have Social Security and a pension?”
“Work with me, Horace.”
“Well, it don’t matter. Those aren’t verifiable income.”
“What? It’s Social Security! And a pension. What could be more verifiable than those, Horace?”
“I don’t make the rules.”
“I lost my leg in the war, Horace.”
“Excuse me?”
“Look, Horace. I’m broke, and I can’t afford my mortgage. Wouldn’t it be smarter for Bank of America to modify my loan than to let my home slide into forclosure?”
“I done told you, I don’t make the rules.”
“Horace, I’m going to commit suicide if you don’t give me a modification.”
“I’m going to have to transfer you.”
“To where?”
Click. Click. Silence. Click.
Dial tone.

So much for HAMP."

Disclosures: Paco is long TBT, UCO, and gold. He also holds U.S. dollars by necessity, pending the advent of private gold-backed currencies. Paco has been a financial analyst and a portfolio manager for 18 years. You can buy his novel "Discipline" wherever books are sold. Or visit
Questions or Comments:

A comment for the readers among us- you know who you are- I'm currently devouring the above mentioned book, "Discipline." I can honestly say I haven't enjoyed a novel this much in many, many years. Absolutely brilliant, a "can't put it down" thriller with a totally unique plot. You won't be disappointed in reading "Discipline." -CP

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