I found the same response when I went to my lender to modify my mortgage. My mortgage was only going to decrease by $250/month by the time they added in points, refinance costs (yes, they still charge the full amount even though they're getting $500-1000 from the government for each loan they modify), and mortgage insurance (because of decreased property values I now have less than 80% equity in the house, even though I put 20% down). I've been advised to file a complaint with the attorney general's office in my state(MA), but I suspect that the Homeowner Affordability and Stability Act was put together so hastily that what they're doing is unfortunately quite legal. Not what the government had in mind perhaps, but legal nonetheless.
One other option: I have heard about some non-profit groups that are buying houses from the banks and selling them back to the original homeowner. Where are you located? One is Housing & Neighborhood Development Services Inc., or HANDS, in the Newark NJ area. Even if you're not in NJ, maybe they could steer you towards a group near you that might be able to help?
Edited by: LKG9999 at: 6/3/2009 (19:36)
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