Congress, banking regulators and President Bush all are promoting a potential way for subprime borrowers to avert foreclosure. Called loan modification or loan workout, it means changing a mortgage’s terms to make the payments more affordable. 

According to The San Fransisco Chronicle, this isn’t exactly happening. 

“There definitely is a disconnect between what the lenders are saying and what borrowers and counseling agencies are experiencing,” said Kevin Stein, associate director of the California Reinvestment Coalition, a statewide advocacy alliance that promotes access to credit. “It is disheartening to hear from counseling agencies that things are not working out the way they should. There is no accountability. There is no way for anyone to know if what the banks say is coming to pass.”

“Lenders are not modifying these (adjustable-rate) loans,” said Martin Eichner, director of dispute resolution at Sunnyvale’s Project Sentinel, a nonprofit agency that helps consumers with housing problems. “A lot of these loans are so hopeless and irrational that lenders won’t even talk to us.”

If you find yourself in a situation where you can’t make any progress with your lender on a “loan mod”, make sure you speak to an expert about whether or not the FHASecure program will work for you before it is too late.