Wow!  There are “distressed” homeowners and then there are “DISTRESSED!*#“ homeowners!

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Weston, 52, and Parmelee, 51, both arrested last week and jailed on $1 million bond, shared a house in the suburb of La Canada-Flintridge that is in foreclosure, authorities said.

“The two allegedly sought loan modification assistance from the victims but believed that nothing was being done and wanted their money back,” a statement from the district attorney’s office said.

Everyday I speak with homeowners that have gone the do-it-yourself  route when attempting a loan workout with their lenders. Most have given up in frustration and the few that have “succeeded” ended up with little if any “modification” of their mortgages. In some cases payments actually increased.

If you are seriously thinking about doing your own loan modification ask yourself if you’ll have the patience…let alone the cold blooded detachment and expertise to deal with the sharks at your lender.

Watch as Congresswoman Maxine Waters tries her hand at a loan modification.

“The average American trying to negotiate a loan modification will not be able to get it done,” said Waters. “It will be impossible for them to get in touch with the right person, and even if they get in touch with a so-called counselor, they have a cookie cutter kind of direction that they go in.”

More BS from a TARP recipient

According to a copy of the lawsuit, the Floreas have been paying their mortgage loan in the amount that complies with the terms of a written loan modification offered by Countrywide Home Loans. The Floreas signed the loan modification Jan. 10, 2009, and sent it back to Countrywide via FedEx, the lawsuit said.

Bank of America announced the finalization of its purchase of Countrywide Home Loans in January 2009.

When Bank of America acquired Countrywide, it became legally obligated to honor Countrywide’s loan modifications, Lawson said.

The Floreas’ modified mortgage payment was $584 per month. In late June 2009, the Bank of America sent a statement to the Floreas indicating their monthly mortgage payment is $924 — the initial mortgage payment amount, Legal Aid Society lawyers wrote.

The Bank of America correspondence to the Floreas also indicated they had a past due balance of $11,083 on their account.

According to the Floreas’ lawyers, Mrs. Florea made several calls to Bank of America and each person said the Floreas’ loan modification was still being processed. In late July, Mrs. Florea was told by phone that the Bank of America would initiate foreclosure proceedings if she and her husband did not pay the past due balance and resume monthly payments of $924.

On Aug. 24, 2009, Mrs. Florea tried to make a payment by phone but was refused and told there was a hold on her account because she is delinquent, wrote Legal Aid Society lawyers. She spoke with several people who said her loan modification was not processed because the income information was inconsistent, said the Legal Aid Society.

According to the lawsuit, Bank of America has reported negative activity on the Floreas’ account to the credit bureaus since at least March 2009.

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Lawson said the allegations in the suit against Bank of America contrast with what many banks have said regarding their modification of mortgage loan terms as a way to help alleviate the foreclosure crisis.

“Now here’s a bank where after already giving a homeowner loan modification, they turn around and say we’re not honoring this after all. You owe us thousands of dollars and if you don’t pay us, we’re going to take your home from you. So, it just runs counter to everything that most of the banks are saying out there right now,” Lawson said.

The Legal Aid Society of Southwest Ohio also has filed a similar lawsuit against Bank of America on behalf of a Hamilton County woman who has resided in her home for 18 years.

A loan modification is an agreement between a lender and a borrower that changes the original terms of a loan with the goal of making house payments more affordable.

Loan modifications can be accomplished in a variety of ways:

• The interest rate on a loan can be temporarily lowered.
• The interest rate can be permanently changed at a lower fixed rate.
• An adjustable rate could be changed to a fixed rate.
• The term of the loan could be changed from 30 years to 40 years.
• A principal reduction of the loan amount (rare)
• A combination of all of the above.

Read about it here

Tens of thousands of financially strapped homeowners who have asked lenders to lower their mortgage payments are instead winding up with higher monthly payments and larger debts on their homes.

Homeowners who were hoping for lower payments are discovering to their dismay that lenders roll late fees, back taxes or other costs into the principal, sometimes turning a difficult payment into an impossible one. That is one reason that many reworked mortgages are sliding back into default.