• 06
  • January
    2012

For most banks their preferred business model is to make loans and have borrowers repay the principal and interest in accordance with the original lending agreement. But unfortunately the lingering effects of the housing crisis in Georgia and across the nation have left banks with difficult choices. Because few banks want to be in the business of owning or selling homes, they may choose to try to facilitate a loan modification that will allow for as much recovery as possible.

Most people employed in the lending and banking industry have likely seen the story that has appeared in the news in the last few days about the man who very nearly lost his house after one of his payments was 80 cents short. From the headlines a casual reader would be led to believe that this man had been regularly making all of his payments until one day he accidently paid 80 cents too little, at which point the bank sent immediately sent in the black helicopters to throw the man forcibly from his house. Of course it did not transpire quite like that.

A closer review of the story indicates that a man who was potentially going to be facing a foreclosure due to his inability to make payments was granted a modification. The bank lowered his monthly payment by $200 dollars, with the sole condition that he make timely payments for three months. If he was able to make the newly reduced payment on time for three months the reduced payment would be permanent. Apparently due to a typographical error the man underpaid, by 80 cents, he contacted a customer support person who advised him to send in a check for the difference. While the bank initially rejected the payment in notified him that he had violated the terms of the modification, they soon followed up to let him know that he was still going to be able to receive the modification and that the 80 cents would not cause any additional problems.

Source: TBO.com, "Typo involving 80 cents nearly cost man his home," Shannon Behnken, Jan. 4, 2011