The twist is that that the mortgage modification offer was just another loan. I never looked into the details of these, so this is new to me.
The Wall Street Journal ran a better article on Saturday:
In a report to Congress on Oct. 26, Mr. Barofsky concluded that some borrowers seeking loan modifications through HAMP might wind up “worse off than before they participated.” Back payments, penalties and late fees triggered when homeowners are rejected for a permanent fix can push some borrowers over the edge, he said.
