There is so much fan-fare being made by our Attorney General Jerry Brown of California about all the scam artists taking advantage of home owners facing foreclosure. I agree that he is doing a great service in pursuing crooked loan modification companies. Perhaps Mr. Brown should start checking out the banks processing of loan modifications.

I think  banks are being just as dishonest as the crooked loan modification companies.  As an example, I know an attorney who has been trying to get a loan modification from Wells Fargo since June of this year. They keep requesting more and more documentation. So far they have had financial statements, tax returns, two hardship letters, and two brokers’ price opinions submitted to them.    I personally know that all of the documents have gone in, that Wells has been called at least once a week since June, and guess what; the client finally had to stop making payments.

So the client immediately gets a call from Wells Fargo asking why they hadn’t made this month’s mortgage payment. The client says we’ve been talking to you since June. Oh, we have no record of any calls.  Oh sure, maybe the right hand does not know what the left hand is doing. I have another client that worked in collections for a bank and he said that is very common for large banks; one division does not talk to another division, or maybe in loan modification cases they just don’t want too.

In short, banks don’t want to do loan modifications. They want to keep collecting mortgage payments until the home owner has depleted their savings and can’t  more any more mortgage payments.

Here’s another typical example of someone having problems getting a loan modification from a bank. This a story from the The Atlantic:

“Since being laid off eight months ago, Deanna Steuernagel and Shawn Burke have become most disillusioned by the frequency with which they’ve encountered various scams specifically targeting the unemployed. Unscrupulous greed clearly holds no sympathy for the downtrodden. Considering the months of delay tactics Chase Bank has employed on Deanna’s loan modification application, forestalling a decision until she completely depleted her savings, it would not surprise her to receive notice that she doesn’t qualify for Obama’s Hope Now program because this month she finally defaulted on her mortgage.

Back in May, Deanna completed and submitted the full packet of paperwork Chase requires from customers applying for mortgage modification. The four times she has called Chase to check on its progress, an agent has informed her that the underwriting department has yet to receive her application because the packet lacks one detail or another. In no instance has Chase sent her a notification requesting further documentation.

“Every time I call Chase, I get a different story. I told them I didn’t have money to make my October mortgage payment. They said not to worry about foreclosure because I’m already in the system. Do I trust that? No,” Deanna says.

“That’s the way the system works,” Shawn adds. “Like insurance claims: they just delay and delay and delay, trying to wear you out so you just give up. The banks are either looking to delay so long for her situation to change so they can reject her, or to wear her out so they can take her house.”

Shawn sums up the experience of a lot of people trying to get bank loan modifications and Mr. Brown needs to go after the banks now.

So like I said at the beginning, which one is worse a loan modification scammer that takes your money upfront or a bank that promises a loan modification and bleeds you until all of your savings are  gone, you can’t make any more mortgage payments, than forecloses? This is not why banks  got all that government money to make loan modifications are for, to scam the homeowner.

What do you think? Have you had a similar experience?