Mortgage Modification: Many More Hurdles
The administration’s loan modification program has helped 55,000 troubled borrowers so far. But the housing crisis is complex and the fixes aren’t so easy.
The housing crisis has become very serious and complex according to CNNMoney.com. Most of the loan servicers are flooded by applications, their faxes machines are full and churning out copied paper days and nights. The numbers are busy in most part of the day. The phone lines are jammed. Still, the foreclosure is rising with the increase in the unemployment rate, divorces and other social factors of migration.
Nearly three months after President Obama first announced his $75 billion mortgage rescue effort, his administration is still refining the program in hopes of reaching its goal to save 9 million homeowners from foreclosure. As the NY times reported few days ago, so far, more than 55,000 borrowers have been put into trial modifications, which become permanent if they keep up with payments for three months. Hundreds of thousands more have applied.
Well, as we speak this loan modification process is getting longer and complicated. In some cases, the lenders are back to their original game. They were nice in the very first few days, now back to their dirty old game of playing with words, issues and papers. Most of these folks are collection representative with nasty phone habits and manners. The initiative must still get over several hurdles before its chances for success can be determined. Here, the lender has build many layers of Chinese wall made of not only real brick but some time with iron gates and panthers watching its caves.
The program’s guidelines were issued on March 4, but it took many servicers weeks to reprogram their systems and train their staffs. Many did not even start accepting applications until early- to mid-April, frustrating troubled borrowers forced to wait to find out if they qualify for lower rates. Servicers are still learning and giving training to their newly hired employees. Many servicers slowed down the process with the excuse that their software is not ready or they waiting for more guidelines to come. In fact, everyday, they came with different excuses.
This is causing lots of delay and confusion. It is a constant battle of sending the lenders every day something new. Each time the lender demands something new. In one case, they asked a marriage certificate along with utility bills. I remember in one instance they demanded an electricity bill for the month of April, which was promptly sent to them. Now, the servicer is demanding a utility bill for the month of May. They want to see if that is paid or not. Dumb question, there is always a column on the bill which says the current amount, and the amount last paid. Most of the reps do not understand simple logic. They are not even familiar with the basic computer functions and put you on hold for long time. It is shocking they never receive anything, or refuse to acknowledge something sent already.
One complicating factor in the mortgage meltdown is the fact that the loans are bundled into securities and then sold off in pieces to investors. Some servicers have blamed the slow pace of mortgage modifications on the fact that their contracts with investors limit their ability to adjust the loans’ terms.
To address this concern, Congress is currently finalizing a bill that would give servicers a “safe harbor” in modifying mortgages.
“The goal of ‘safe harbor’ is to allow servicers to use these program to their fullest capacity. Some investors, however, are lobbying hard against the bill, saying that the contracts already give.
Although the administration has since expanded the modification requirement to cover second liens, some investors still aren’t satisfied. They want the administration to treat second liens in the modification program the same way it does in the Hope for Homeowners program, which requires these liens to be extinguished.
Escalating Unemployment: The rising unemployment rate is threatening to reverse any gains being made in stabilizing the housing market. When homeowners lose their jobs, they often can’t afford to stay in their homes. Modifications often can’t help, experts say.
Few Words for The Borrowers
While I have lambasted lenders many times in these columns, some of our borrowers have not been above board as well. They were willing partcipants in this greed game in many ways. Most of them would tell you lots of stories when they come to your office but still would not bring the right papers with them. Their knowledge about the basic aspects of their loan is very elementary. Of course story telling skills are great. Some do not even know how much is their current interest rate or terms of the loan. Some were offered good modification terms, which either they lost the paperwork or procastinated, and did not sign on some flimsy grounds and hopes of more bargaining. The offers are lapsed and new paperwork is required and meanwhile they had serious negative ratings on their credit reports. Some of these folks needs another modification. Why on earth they were lazy in the first place. I want to be honest here. I see lots of lazy, financially irresponsible people who are borrowers. Truthfully, some of them should not be allowed to buy homes, and it is not a bad idea if some of these people should be living in apartments. Sometime you wish when you see a lousy driver ahead of you, how on earth he got a driver license. He should have been behind bars. Yes, that is true. Some are just lazy people, and I have no compassion for them. Your brought it to yourself, and meanwhile you are an equal contributor to mess up our economy. How come you don’t pay your HOAs and insurance, and mow your lawn, and sometime park in your front line. Come on guys civic lessons are not taught in a school, and neither the lousy parental skills where only children are procreated and then lift on whims to be raised and educated from the public system. Okay, I am sorry, I get drifted as I am not a social scientist to lecture here having lots of my own flaws. Truth is that some of these folks should not be allowed to be homeowners and some should not be allowed to get married. That is a great irony of our time.
This may be an unending process. Another bad thing, which I noticed that homeowners are getting used to stay free and without a payment in these homes. This is making their approach very parasitic and self centered. They are dreadful to pay even a modest payment. They should acknowledge the fact that their action is conducive to causing bad economy. If they can continue paying theri car payments, and their credit card payments, they can also pay their mortgage payments. It shocks me when folks come to my office with all kinds of stories and gory tale of the miserable things happened to them but never acknowledge their own financial irresponsibility. How come they can’t pay a mortage monthly amount of mere $900. Yes, this is true. This lady called me from this fancy location and with crying and tears of course told me she is behind her payments for 6 months. I asked her what kind of hardship she had? She is still fully employed and had in fact taken a foreign tour as well. How can you go and take a foreign tour and not pay your outstanding mortgage statements? She said and acknowledged that she is a procastinator. In fact, I was so afraid few times that I sent the loan modification signed package myself right to the box else these procastinators forget and just don’t mail it. Yes, it had happened, and the bank refused to acknowledge the expired contract. Once they refuse, the modification has to start all over again. This, of course, is the pinnacle of procastination and laziness. Next time I make sure, they do not come to my office. Some of them of course had stiffed me with the outstanding balance.
This is very unfortunate when an attorney modifies the loan, the terms are attractive, but still the homeowners is reluctant to take it. Why? Their excuses are novel and unique. The wanted half of the principal reduced and interest rate locked fo 40 years fo 3 percent. That shocks me when a mobile society like US, intends to stay in their home for 40 years. How many people you can tell us who stayed in their homes for 40 years, or ever stayed in their homes for 40 years. Probably there may be exceptions in some strong ethnic neighborhoods. On average, a US family moves about five times in their life and buys at least 5 to 8 homes during this life span.
Folks, this is plain and simple loan modification. My answer to them is simple:
-How come you were not so smart when you were signing your original loan?
-Why are you asking all kinds of fault in simple loan modification papers.
-Why did you not ask all these questions at that time?
-Were you sleeping when the loan officer ripped you?
-What happened during the closing?
-Did you take an attorney with you?
-You had one home, what was the dire necessity to buy a second home?
-There was no gun placed on your head by anyone?
– Why on earth you refi your home four time in last 6 years?
-Lastly why happened to the cash out after refinancing?
We are creating a socialistic mentality. Of course, we live in USA and not in some communist country or even in the former USSR. This is USA and not a housing complex of some socialist country. These are legal contracts, and decent human being should honor if an aid is provided to them to get through this turbulent time. They should say thank you loudly. Profit making is a genuine American capitalistic issue and this creates financil security and brings prosperity to our system. We cannot deny lenders, and other related agencies to make profits. It is fundamental principle of capitalism. This crisis was not created by George Bush (no matter how much unpopular he can be, and neither created by Obama: it was created by the collective greed of all of us including lenders, loan officers, real estate brokers and of course our greedy politicians. Of course, it is loan modification—definitely not a loan rewrite or a refinancing. Take what you can take,and remember one thing beggers cannot be choosers!.