Fine print in mortgage modification forms contain booby trap

Signer beware! Turns out the forms homeowners fill out to apply for lower monthly mortgage payments for three months while waiting for more permanent relief contain a potentially lethal booby trap courtesy of the U.S. Treasury Department.

According to a report in the Miami Herald, the forms require borrowers to "waive important notification rights."

The result, says the paper, is that more and more homeowners who thought their enrollment in the trial modification period would lead to a more long lasting roof over their heads, find, instead, the rug pulled out from under them by lenders who at the last minute sell the property without even bothering to notify the homeowner.

In addition, of the more than 759,000 trial loan modifications thus far started, just slightly more than 31 thousand have managed to convert to the coveted permanent new loan status.

Says the paper, "That averages out to 4 percent, far below the 75 percent conversion rate President Barack Obama has said he seeks."

The biggest concern raised by the newspaper, however, is the fine print that basically allows the lender, at the very last minute, to yank the house away from the homeowner and sell it to someone else, even though the homeowner had been diligently paying the agreed upon, temporary loan modification rate.

In the cases cited, the homeowners were apparently already in early stages of foreclosure at the time they entered into the temporary loan modification agreement with their lender. The language of the forms allow the lender to pick up those foreclosure proceedings where they left off at the time the loan modification began.

You do not, of course, have to be in foreclosure to seek loan modification, though your chances of getting a permanent fix appear very slight based on preliminary figures. In January, much better statistics should be available about just how many people are really getting full time help.

If you have signed one of these temporary loan modification forms, you MUST read it over very carefully. If it contains the language we are talking about here ( and apparently most do) then you have to stay extra vigilant about what your lender might be up to, and maybe even want to talk to them often to make sure nothing is being planned behind your back.

Charles Feldman is a journalist, media consultant and the co-author of the book, "No Time To Think,-The Menace of Media Speed and the 24-hour News Cycle.

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