What is not surprising, though, is the failure of the government's highly touted loan modification programs. The same problems that homeowners have always had in such situations have not even been addressed, let alone solved. Homeowners sit on hold for hours, the lenders take months to make a decision on the workout program, and no voicemail is ever returned. This chain of events simply continues until the day before the county sheriff sale, when the owners are sadly turned down by the mortgage company.

The same excuse is given to the owners time after time: "We're sorry, but you do not make enough income to qualify for a modification at this time." This ignores the fact that it is the mortgage companies themselves who are often responsible for homeowners not being able to qualify for a loan workout. They wait so long that several more payment due dates are missed, which increases interest, adds late fees, penalties, and attorney fees and court costs.

Thus, because the banks wait so long to make a decision on whether or not their clients qualify for a mortgage modification, a several hundred or thousand dollar deficiency turns into tens of thousands of dollars of accrued interest and various junk fees. And the banks call this a "proactive" effort to offer homeowners a second chance to get back on top of their mortgages!