I was driving to work this morning and heard a report on Loan Modification on NPR’s Morning Edition. It started out as puff piece on how well Bank of American was doing with homeowners who need loan modifications.

Luckily by the end it got real as the to the real situation:

She tells the borrower he has to be able to support even a reduced mortgage payment, and he doesn’t make enough money to do that. That sounds reasonable. Except that as I look over her shoulder at the borrower’s income, he still makes $2,400 a month, and judging by what he owes — around $200,000 — it appears that he actually should qualify for help through the government’s Making Home Affordable plan.

I ask Ingram about this, but she says that that isn’t right. “No, he does not qualify,” she says.

But, in this case, too, after NPR inquired further with supervisors, it turned out that the homeowner actually did qualify. So, even just while I was at the call center, either the computer or somebody made a mistake, and a homeowner got rejected when he shouldn’t have.

In the end, the bank did offer the homeowner a loan modification. Bank of America says that while NPR’s inquiry may have expedited that decision, the bank would have come to the same conclusion through its own review process.

Housing advocates say major banks are denying help to thousands of people who should qualify, and many don’t get saved by a second look.

Meanwhile, this year alone, 2 million people are on track to lose their homes through foreclosure — the most since the Great Depression.

After hearing and reading the report it demonstrates why  why agents and sellers need to work with specialists. The Senior Vice President Ken Scheller is in charge of “home retention” — an effort he says is designed to “keep as many people in their homes as possible,” but they have these horrible call centers.  They hire customer service people who are not sophisticated enough to put in the right data to calculate income.

Mr. Scheller should be hiring out of work loan officers that understand loans and the qualifying process.  Many good people are loosing their homes for lack of knowledge with the big banks.

Loan modifications can work…but as the article stated if you can not repay the debt short sales and deeds in lieu of foreclosure need to be looked at.

Here is the link for to hear the report on Morning Edition