Richard Zombeck Richard Zombeck
Eyes and Ears Mortgage Specialist and Founder

Senator Al Franken (D-Minnesota), who in my opinion should be wearing a cape to work every day, introduced an amendment to the Financial Reform Bill that would create an Office of Homeowner Advocate to assist homeowners who have been denied a loan modification through HAMP.

The Franken Homeowner Advocate Amendment, according to the press release, would be funded from existing sources and its focus would be to assist homeowners who believe their mortgage servicer is breaking the rules.

Prominent homeowner and consumer advocates from sites like, MFI-Miami,, and my, to name a few, have shown support for this amendment because it would add an obvious and much needed appeals process to a program that has been abused by lenders and loan servicers since its introduction early last year.

There is, however, a possibility that because of a push to move the Financial Reform Bill along before lobbyists manage to gut the thing with their toxic amendments that crucial amendments, like this one, may not make it into the bill.

In addition, since Franken’s amendment on credit rating agencies was up for debate last week, it’s unlikely that this amendment will make it to the floor in time. It could however make the cut for the Manager’s package – particularly since it already has bi-partisan support.

Bloggers and consumer advocates are hoping to see this one make it. Most notably, White House communications director Dan Pfeiffer, who praised the amendment in his White House Blog post listing it as one of ten amendments that would strengthen the bill. “Simple, straightforward improvements that would further strengthen an already strong bill and really help American families. We’ll call them the “Good Guys”. Let’s hope they prevail over the “Lobbyist Loopholes” as the debate moves forward,” Pfeiffer wrote.

Back in January I wrote a piece called Loan Modifications: A $4 Billion Con Game. I noted that nearly one million homeowners had entered trial modifications and that the majority of them were denied permanent modifications. According to Propublica the total number of modifications that have been granted permanent status stands at less than 230,000. That would imply that nearly 800,000 were denied. None of them were given the opportunity to appeal the decision.

The reasons given by loan servicers and banks for denying modifications – after approving homeowners for a trial period and taking their money for several months – come in varying degrees of lunacy.

In one glaring example, after three months of receiving trial payments, GMAC told one couple they were denied a permanent modification because they made their payments early. has received hundreds of stories from homeowners who have been denied for equally ridiculous reasons. Kathleen Burt, from Fort Lauderdale, Florida was told by a Chase representative, “we’re not obligated to follow the federal guidelines.True the numbers work, but the bank doesn’t have to take you on if we won’t make enough money.”

Catherine and Brian D., of Paso Robles, CA were denied twice. Once for having too much income and another time for not having enough – their income never changed.

Other reasons homeowners have cited for being denied include, Brenda Reed, who was accused of forging survivor benefits awards; Staci K. was told she had equity in the house despite being $90k underwater; Martha W. was told that her address could not be verified; Michael L. was denied because “the investors wouldn’t make money” after having taken his trial payments for nine months; Rick L. was told he didn’t have sufficient income to make the payments he’s been making for eight months – the bank subsequently increased his monthly payments by $500; and that’s just a sampling.

In an interview with Huffington Post, Franken said, “One of the problems is that the servicers or representatives who talk to people on the phone don’t seem to [have the necessary expertise]. That’s sort of the problem that this [amendment] is addressing.”

Once a homeowner has been denied a modification, they have no available resources to question or appeal the decision. There are no viable official channels available to them. They are, for the most part, left to the mercy of the arbitrary, unfair, and deceptive practices that were initially responsible for this mess.

According to a press release from Franken’s office, “Lawyers report stories of contacting regulators about problems with the HAMP program, only to be told, ‘If the servicer says this is correct, it must be correct.'” Are these the same regulators and servicers that didn’t foresee the collapse of the housing bubble and created “liars loans”?

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