Banks continue to disregard the law and deny relief to 90% of homeowners who are legally entitled to Home Affordable Modification Program (HAMP) modifications, as shown by the U.S. Treasury’s latest HAMP Reports.

Specifically, page 9 of the report shows that, as of October 2011, banks who participate in HAMP collectively service loans for a total of 891,542 homeowners who are legally elligible for HAMP modifications.  However, the banks have only provided 80,223 of these homeowners with active trial modifications.  When one divides the 80,223 active modifications by the 891,542 that are actually required, the result is that the banks only comply with their legal obligations less than 10% of the time, meaning they break the law over 90% of the time.

Some banks might try to point to the “active permanent modifications” figures on page 9 of the report to suggest that they are in compliance with the law.  The error with this approach is that the “active permanent modifications” figure includes every permanent modification that has been issued since the start of HAMP in January 2009.  In other words, the number does not show specifically how many of the current 891,542 elligible homeowners are on modifications.

These government-verified statistics are staggering.  What is worse, however, are the following two facts: (a) by publishing the statistics, the government is clearly aware of the banks’ illegal conduct, yet (b) the government allows these banks to continue operating illegally.  This is a harsh and frightening reality for any homeowner currently facing the threat of foreclosure.

Fortunately, Maryland lawmakers have taken an aggressive approach to the problem by enacting legislation designed to prevent foreclosure if the bank fails to comply with HAMP.  For instance, Section 7-105.1 of the Real Property Article prevents foreclosure if the bank does not comply with its loss mitigtion oblgiations, such as HAMP requirements.

The moral of the story is that homeowners should not rely on banks to do the right thing.  Even if a bank denies a loan modification, the homeowner should investigate whether the bank has acted illegally.  Then, if it turns out that the bank wrongfully denied the modification, the homeowner can stop the foreclosure and save his or her home.  The homeowner need only raise appropriate objections to the foreclosure within the court’s deadlines for asserting the objections.