The prevalence of junk mail and spam has certainly made weeding out noise more difficult over the last decade. With email, software does a great job of hiding the junk and making the legitimate messages obvious, but there are occasional mistakes. Spam might show up in my inbox a few times each week, while I need to remember to check several layers of junk mail filters for false positives — legitimate email marked as spam by an aggressive filter.
The same holds true for traditional mail, or “snail mail” as some of the technology-inclined would call it back when the use of email was first exploding. With the proliferation of computer-based communication, one might have thought that the amount of physical paper sent through the postal service would decline, but it seems to have increased, at least from my perspective. I haven’t looked for any studies or surveys to put some numbers behind this thought, but when my mailbox is stuffed full from just a few days away with unnecessary ads and marketing materials, the junk mail industry must still be going strong.
It’s easy to get into the habit of ignoring this, even to the point of discarding or destroying paper mail without review. Unfortunately, people who have developed this habit may be missing some important information, deals that might save money.
I’m not talking about coupons or invitations to save 15 percent on your car insurance. Banks are sending thousands of dollars invitations to modify homeowners’ mortgages without any strings attached as part of a settment, and a significant percentage of those receiving these invitations don’t send them back. We’re so accustomed to receiving pitches to save thousands on mortgages that seem too good to be true, that they end up discarded without any thought about whether it might be legitimate. The problem is that these offers are legitimate.
While many households are having difficulty refinancing their mortgages, Chase is sending letters to thousands of their customers with a mortgage modification ready to go. These customers did not necessarily request to refinance or modify their mortgages, so most were not expecting anything. The modifications are part of the results of a government settlement against Chase and four other banks.
At first, Chase mailed letters to its qualifying customers asking them to call the bank to discuss the modification. That approach didn’t work; I’m sure most customers assumed it was some kind of scam to get households to spend more money with the mortgage servicer. Chase eventually changed its approach, sending letters that described the modification in detail, but is still finding it difficult to get customers to respond.
Of the five loan servicers involved in the settlement, Chase, Bank of America, Wells Fargo, Citi, and Ally, Chase has claimed the most credit (they wouldn’t be offering such a benefit to borrowers without a strong incentive from the government in addition to the legal requirement as a result of the lawsuit) for mortgage modifications — automatic reductions of interest rates, principal, or both — as opposed to short sale opportunities, which are also allowed by the settlement terms.
Not everyone has received these letters, so if you have a home loan with Chase and haven’t received a mortgage modification, it may not be that you missed the mail. You have to qualify.
- The loan must be directly held by Chase (or the other four participating lenders), not packaged into a mortgage security and sold. Mortgage-backed securities were used in some cases to mask the risk of default inherent within sub-prime loans, and contributed to the real estate crash and recession.
- The mortgage must not be backed by Fannie Mae or Freddie Mac.
- Homeowners must be behind on their mortgage payments or the remaining mortgage balance must be significantly higher than the value of the house.
These restrictions significantly limit the intended audience of the modifications. I have a few friends who could really be helped — or even saved — by a modification of this type, but they likely don’t qualify because there’s an excellent chance that Fannie Mae or Freddie Mac backs their loan, like millions of other homeowners.
If you meet each of these conditions, it might be worthwhile to call your bank to make sure you didn’t miss an important document. The savings could amount to $500 a month or more without extending the term of the mortgage. Prevent any missed opportunities in the future by making sure you review the mail you receive, even if it doesn’t look like an important document when you glance at the envelope or even if bears resemblance to junk mail, advertisements, or even scams.
Published or updated September 11, 2012.