March 4, 2009 – Mortgage modification is all the buzz. It seems we hear about a new program every week, Hope 4 Homeowners, Helping Families Save Their Homes Act, and the most recent Homeowner Affordability & Stability Plan. The latest plan is the Obama Administration’s attempt to stem the tide of foreclosures. These programs are the daily topic of discussions across cable television and the radio. What do you tell someone when they call your office with questions?

First and foremost tell anyone calling beware of any organization charging an upfront fee or advising homeowners to skip mortgage payments. Those tactics and fees are not a part of any government program. If they chose to do business with those companies, they are on their own and will likely not receive any benefit they could not achieve on their own.

Hope 4 Homeowners is a voluntary program that did not require any action by Congress or the President. It is a program supervised by Housing and Urban Development. Each state has a list of approved program providers and HUD Counselors. Participation in the program is without charge to the homeowner.

Helping Families Save Their Homes Act is currently being debated in Congress. The vote may come as early as the first week of March. It would allow judicial modification of mortgages under the bankruptcy code. It has court filing fees and attorney fees, and would not involve a mortgage modification company.

The Homeowner Affordability & Stability Plan is the latest proposal. A review of the executive summary shows a multifaceted plan to help homeowners. It contains the aforementioned judicial modification provisions. It also includes monetary incentives for mortgage services to voluntarily modify mortgages. Those incentives include bonus payments to modify before a homeowner is in default and supplemental payments to reduce principal on underwater mortgages. Those payments come from the government, not the homeowner.

So, tell those callers Modifier Beware. The law has not changed. Be wary of the servicer or third-party provider asking for upfront fees. Those programs are not a part of any government bailout.

Edward W. Harness, Harness Law Offices LLC, Milwaukee, is regional co-counsel for the National Consumer Bankruptcy Litigation Center and a member of the National Association of Consumer Bankruptcy Attorneys. 

Edward W. Harness is with Harness Law Offices LLC, Milwaukee.