Chase denied loan mods for absurd reason—Homeowners in limbo

Homeowner Lesa Herron's letter from Chase Home Finance states that she was denied a loan modification because her 'hardship is not of a permanent nature.'

On the Saturday before Thanksgiving, Lesa Herron of Santa Rosa, Calif., opened a letter from Chase Home Finance [1] (PDF). She’d been denied a permanent modification under the federal government’s loan-mod program, Chase said, because “Your hardship is not of a permanent nature.” No other reason was given.

For Herron, that was hard to understand. She was working two jobs and her mortgage payment still amounted to more than half of her income. She’d fallen two payments behind. If her money troubles were only temporary, it was news to her.

We at ProPublica reported last month that mortgage servicers are often not following the Treasury Department’s rules for the program [2] and provided three examples. One involved another homeowner who, like Herron, had been denied a modification because his hardship was not “permanent.”

Since that story, we have found several other similar cases: homeowners who may well be eligible for the program but who were denied because their troubles were not deemed “permanent.”

The cases ProPublica found all occurred before Treasury explicitly barred such denials in December. Despite the change in guidelines, however, those homeowners are still in limbo. Some face the possibility of foreclosure.

Read on.