Quibbling over unemployment benefits have left many in a worse condition as regards loan modification. Patrick Dinunzio has lived with wife on his ranch for the last seventeen years. When he lost his job he landed up in financial trouble and tried to get help from HAMP. His lender CitiMortgage granted temporary modification but after nine long months refused him the permanent status; yet HAMP specifies that the temporary period should be for three months.

The ground for the refusal was that his income was insufficient. But Dinunzio claims that it is the same (including his unemployment and his wife’s social security cheques) as when the loan was granted temporary modification. When they knew from the start that he was on unemployment benefit why did the bank at all start the process? This was Dinuzio’s main query.
During Dinuzio’s trial run the government made changes in the programme. It decided not to consider unemployment benefit as income because that was of a temporary nature.
In Detroit many are experiencing the same pain as Dinuzio. The temporary modifications of loans have not only failed to solve their problems but have made matters worse. Their credit history has been stained and now they have to pay back the amount that was supposed to have given them relief in the temporary phase. The problem is continuing, irrespective of harsh criticism and public anger.

The banks argue that they do not have enough staff to handle the new programmes of the government that are being continually changed. The personnel are not conversant with the new situation. Mark Rodgers of Citi refused to comment on the specifics of the case. He said, “Citi works very hard to find solutions for customers. The biggest challenge to converting a permanent modification has been getting all of the required financial documentation, particularly establishing that the income provided verbally matches the documented income.”

The permanent modification of the loan reduces payments for five long years. After that period the rate of interest is expected to increase but not by over 1% annually. Alvin McHale of Homeownership Preservation Office of the Treasury said that the amount due on the loan remains the same but it is adjusted over these years so that the borrower gets a breather to overcome bad days.

The letter informing Dinuzio about the denial of permanent status said that he owed the bank over $21,000 as arrear. If this was not paid then foreclosure proceedings would kick off.

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