Seriously. From the WSJ:
Sarah Larson had been trying for months to get a break on her mortgage payments when a letter from her bank arrived in March. Sitting at the dining-room table of her Minneapolis house, the 33-year-old acupuncturist ripped open the envelope and pulled out a list of important documents demanded by Bank of America Corp.
Bank statements. A utility bill. Her death certificate….
Turns out the bank had erroneously asked for proof of her demise—the sort of paperwork snafu that has roiled applicants since the Obama administration’s foreclosure-prevention plan was announced in February 2009…
So far, the 17-month-old effort has delivered a permanent fix to less than 15% of the borrowers the administration said it could ultimately help. Through June, roughly 398,000 of the nearly 1.3 million homeowners who entered the program had been granted permanent fixes. But more than 520,000 borrowers have fallen out of HAMP.
The article has several more tales about the modification process:
In some cases, applicants’ spending patters are scrutinized in ways they find perplexing. David Rodriguez-Cruz was denied a loan modification on his two-bedroom San Diego home this spring. He says a Wells Fargo & Co. employee told him he spends too much on gasoline—but not enough on household utilities.
“We spend more time outside the house,” says Mr. Rodriguez-Cruz, who has a one-hour round-trip commute from his job as a refrigeration technician near the Mexico border.
– Fannie Mae are going after so-called strategic defaulters unless they go through a modification process, a process just like the one mentioned above. One might note that this sounds a lot like squeezing just a bit more blood from the stone of the struggling homeowner. Make them jump through 3 or 4 more months of payments before denying them the loan, or simply extend out the terms of mortgage in such a way that increases the length they are underwater. And Congress is pushing for the FHA to do a similar thing.
– I hope all these people understand that they pay extra for their mortgage for the ability to walk away. They are actually paying more per month to be able to walk away. Nobody ever seems to mention that with all the talk about this topic.