One of the biggest controversies over the home loan modification programs of the past was that to become eligible, one had to fall behind on their mortgage payments. If a homeowner was using rising credit card debt to pay monthly bills so they would have enough actual cash left over to pay their mortgage every month, that homeowner would most likely not be considered eligible for a home loan modification.
Yet once a homeowner was in arrears on their mortgage, the mortgage servicer could begin what is known as parallel foreclosure proceedings. Parallel Foreclosure meant that a homeowners home was going to be foreclosed upon but if by some miracle a new mortgage payment plan was completed in time, the foreclosure could be halted. All this means is that the homeowner is at the mercy of a government program to ride in and save them in a timely manner from an already in progress foreclosure. Ha ha, good luck with that. Sometimes it worked, other times it did not.
So in rides Keep Your Home California dot org, bombarding prime time television in the Los Angeles area with commercials. Curious to see how the up to $100,000 in mortgage forgiveness program worked, I answered their 11 questions. Sure enough, I failed and was not eligible for their mortgage relief program. The reason? I was not behind on my mortgage! I could become eligible were I to fall two mortgage payments behind.
In other words, the only way to be eligible for a mortgage reduction is to prove you are a deadbeat first. Being a homeowner who is extremely frugal but struggling does not count, one must be an actual financial deadbeat. Once a homeowner's mortgage is more than 30 days in arrears the bank can and probably does report to the credit bureau that the homeowner is behind. Once a home is more than 30 days in arrears, parallel foreclosure can commence as well, even though parallel foreclosures are supposed to be illegal.
I'd like to suggest the next big thing for consumers. A way to put 10 grand in an escrow or trust account to be used to hire an attorney, and kept in reserve without it being counted as an available asset. That way at least the consumer will still have one more way to fight through the BS once they rely on one government program to save them from what a previous government program failed to accomplish on their behalf.