Adding Insult to Injury – Homeowners Told to Walk Away From Loan Modifications
Originally posted in March 2009… reposted now because it signaled the beginning of the end.
The fact is, in terms of the foreclosure crisis in this country, the government has failed us at every level and at every turn. Now they’ve apparently decided to tell the public that the companies that have formed to help distressed homeowners get their existing mortgages modified so they can keep their homes, are to be avoided. Why? Because they charge a fee for their services, that’s why.
Well, isn’t that nice. After two years watching the housing meltdown, two years seeing family after family lose their homes to foreclosure, two years of watching the Keystone Cops in congress stand around debating the rules about transporting monkeys across state lines and whether GM pays too much for retiree health plans… and the last so many months watching Washington shovel money into Wall Street banks… the private sector has finally come up with a meaningful solution for many people, one that helps people stay in their homes… and now we’re being told that we should forego that solution because there’s a fee? Oh, dear God. From insult to injury.
President Obama even said it, during his speech that introduced his version of a housing rescue program: “If you have to pay, walk away.” Excuse me… but that’s one of the most ridiculous things I’ve ever heard a president say. Don’t worry… the government is going to help me for free? Does he think we’re all six?
And, to make matters even worse, here’s what it says on the front page of the US Treasury’s Website that is dedicated to helping homeowners, well… at least the homeowners that qualify for Obama’s program, so maybe there’ll be twenty or thirty in every state. It says:
“BEWARE OF FORECLOSURE RESCUE SCAMS – HELP IS FREE!
Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay – walk away!”
Now, before anyone starts getting all fired up about the loan modification companies that, according to the media, are defrauding distressed homeowners left and right, I want to be very clear that I think that those seeking to defraud homeowners in jeopardy of foreclosure are justification for keeping the prison at Guantanamo Bay open for a few more years. Ripped off a homeowner with a loan modification scam… Waterboarding for $200 Alex. Talk about a deterrent… that’s a damn deterrent.
I also understand that, largely as a result of how this whole mess unfolded, we were bound to see the unscrupulous opportunists come out of the woodwork to prey on those desperate for an answer. According to National Public Radio (NPR) on March 9, 2009:
“California seems to be the epicenter for this new industry. Jeff Davi, the director of that state’s Department of Real Estate, says officials started getting complaints about loan modifiers last summer, and now they have more than 200 open investigations.”
Is it just me? Or does that sound like an incredibly small number of investigations? The California Department of Real Estate started getting complaints last summer and nine months later there are only 200 investigations going on? And that’s supposed to seem terribly high in a state with 36 million people, and literally millions of distressed homeowners?
Look, I’m not defending that number as being just peachy either. Understand, all I’m saying is that when you take into account the chaos that has given birth to this industry, it doesn’t seem outrageous by any means. Like, if it were 2,000, maybe outrageous, but 200, not so much.
For politicians, however, even 200 investigations become a veritable onslaught if there are cameras in the picture, and considering from whence we came, I suppose it only makes sense that our elected representatives and regulatory agencies would decide to go after the only people that have actually managed to help address the plight of homeowners. What’s next? I know, let’s send the fire department out to burn down people’s homes.
The point that politicians seem to be making, along with state regulatory agencies is that if you need a loan modification, you don’t have to pay for it… you can handle it yourself, or you can call a government program and they’ll help guide you in the right direction.
I have to say that the whole idea that just because a company charges a fee for its work… it should not be trusted, offends me. If there are unscrupulous operators victimizing consumers then put them out of business, regulate them, jail them if need be, but don’t tell people that simply because a company charges for its services, that in itself makes it bad.
I understand that I can handle my own loan modification. I also know that I can prepare my own tax return, or sell my own home, or change my own oil for that matter. There are lots of things I can do on my own instead of paying someone. It doesn’t mean that I want to, or even that I should.
Not all homeowners are comfortable negotiating their own loan modification with their lender or mortgage servicer. They’re intimated, unsure of themselves, they procrastinate, get emotional, they panic. And all too often, at the end of the day, they agree to terms they should not agree to. In something like fifty percent of cases in which loan modifications were handled by a homeowner and bank, the homeowners end up back in default less than a year. This was supported by data published by Credit Suisse and UBS earlier this year.
Effective loan modification companies, on the other hand, report much higher sustainability rates on loan modifications. One I interviewed in Irvine, California, for example, reports that over 80% of the loans they modified one year ago are still paying as agreed.
Well, I’ve spent this past month interviewing loan modification companies, law firms, borrowers that have had loans modified, borrowers that have tried to do it themselves or through government programs, and other “experts”. Here’s a 10-point summary of my conclusions:
- This past week I did an on-camera interview with a woman by the name of Cheryl Beckam of Moreno Valley, CA. She is a civil servant working in the Riverside County Property Tax Department. She had owned her home for over ten years before she found herself in trouble and went to seek help. She had always had a fixed rate loan, but a couple of years back, she needed a new roof, and when she asked her bank, they said sure, and to pay for her roof, refinanced her into an adjustable rate loan that ended up doubling its payment after a year, and included a prepayment penalty that made it impossible to refinance before it doubled. (Nice, huh?)
- Ms. Beckam first tried to contact the HUD assistance programs. Let me add some detail to that sentence… she tried to contact HUD for help with her mortgage for FIVE MONTHS, before giving up. Frankly, I wasn’t at all surprised. It’s a common refrain, one that I’ve heard time and time again.
- Next, Ms. Beckam tried contacting her lender, Chase, directly. Three more months of phone calls, sending documents back and forth, waiting for calls and things in the mail that never came. At one point, Chase even told Ms. Beckam to stop making her payments, as she was in “the process” and should expect to receive her documents in the mail in the next few days. Again, weeks passed and nothing came. At this point her mortgage payments were taking up her entire income.
- Now desperate, Ms. Beckam was told by her mortgage broker that she might try calling a company he’d heard of, a private company that helped people negotiate loan modifications… and she did so the following day. Ms. Beckam’s demeanor changed at this point in the interview, and she recounted her experience with that private company. She said everything went so smoothly from that point, saying: “I never had to call and bug them, they were very nice and very professional. They didn’t make me feel badly about what I had done, and less than six weeks later, they got my mortgage payment back to where it was at the beginning, before it started adjusting AND they got me back on a fixed rate loan!”
- Of course, the downside was… the company did charge for their services… about $3,000, as a matter of fact. Was she unhappy about the fee? Not even a little. In fact, she thought it was quite reasonable, and she’s recommended that company to several of her friends since then.
- I contacted the firm that helped Cheryl modify her mortgage, and subsequently met with the firm’s Chief Operating Officer. He was very forthcoming and provided me with his firm’s internal production reports every day over a one month period, and the reports showed a company that had roughly 2,900 inquiries, accepted 2,200 as clients, and was getting 300 mortgages modified each month. If the firm accepts you as a client, and fails to get your loan modified, they refund some or all of your retainer payment, depending on the specific circumstances.
- Additionally, he talked to me about the firm’s sustainability record. Statistically, one year after his firm modifies a mortgage, there’s a 94% chance that it is still paying as agreed, which is so much higher than other published statistics, it’s in another league.
- I asked him about the fraudulent loan modification companies that the media seems to be having a field day going after… and he said that they’re his biggest problem. His feeling is that the industry needs to be regulated to prevent fraudulent operators, but that the government’s answer, “If you have to pay, walk away.” would only lead to more foreclosures. There simply isn’t a comprehensive government solution available… no one organization has the bandwidth to handle all of those in need of assistance.
- Government programs are what they are. They’re frankly overwhelmed by the volume, as are lenders and servicers. As would any single entity. There are millions of homeowners struggling to keep their homes today, and you can only imagine the number of calls being made every day. And loan modifications aren’t magazine subscriptions… they’re more like hand made cars… each situation is different, each lender has different requirements, and as a result each modification requires a somewhat unique approach.
- Telling people that they can handle their own loan modification is equally troubling to me. Yes, it’s a true statement, but there are countless things I can do myself that I may not choose to do myself. Many of the homeowners I’ve had the opportunity to speak with expressed their reticence related to contacting their lender to negotiate a modification of their mortgage. The bottom-line… and this one even applies to me personally, many people aren’t comfortable handling their own loan modifications. And that shouldn’t surprise anyone, in my view.
The government has failed us at every turn, as related to the foreclosure crisis. Now, President Obama’s plan may help some… some. But, especially in states like California, the loan modification companies that are helping consumers get their loans modified are clearly part of the solution… not part of the problem. Branding them as being bad simply because they change a fee for their services strikes me as a less than well thought out response.
And just to wrap my thinking on this up with a bow… I’ll say this: I would prefer to pay a reputable private company to handle my loan modification than depend on help from a free government hot-line type of program. That’s right… if I was in jeopardy of losing my home to foreclosure, I’d much rather pay a company $3,000 to handle my loan modification than I would sit on hold with HUD, hoping the government was about to do something right for the first time in my life… how’s that for blunt truth.
I’m 47 years old and I served in the USAF. I know how the government operates. I can just imagine waiting on hold and then having some government employee or worse, some volunteer tell me that something would be arriving in the mail… yeah right. I’d wait… about 30 seconds… then I’d get my checkbook out and start writing.
President Obama… I really don’t need you to tell me to forego a proven solution by waiting for something that’s never been done, doesn’t exist today, and may or may not work. “If you have to pay, walk away.” That’s not helping anything or anyone.
Government can’t abdicate its responsibility to protect its citizens by simply telling them don’t pay for something, just because you have to pay for it.
Remember the Hope4Homeowners program Bush finally put in place? Remember his rescue bill? Bush made $300 billion available for rescuing homeowners and there was lots of fan fare… woo-frigging-hoo. I tracked it for a year or so, and as of last October, the program had helped a staggering number of homeowners; 79, and that’s according to the Bush fan club at Fox News.
If you can’t figure out how to properly regulate the loan modification industry, then put someone with a brain on it, okay? There are many experts out there, I’ve managed to speak with dozens of them and I’m not the President of the United States. I know you’re just inheriting this mess, but I for one have lost my patience with inept government responses to a crisis that is putting families on the streets, living in tents… children are being forced to leave the safety of their rooms, God damn it.
You like to talk about long-term benefits… what do you suppose the long-term impact on our nation will be as a result of the millions of children that have had to endure the unimaginable horror of being forced to leave their homes?
Clearly, we can spend weeks outraged over $160 million in AIG bonuses. Congress was apparently so outraged it passed legislation, albeit unconstitutional legislation, in 24 hours. Amazing… so things CAN be done quickly over there, and rules can be broken… even constitutional rules… huh? Who’d of thought? Go figure. I wonder what we citizens should learn from watching that. Hmm… interesting.
Do something to stop this… Do it now… Do it smart. Do it very soon… Or, no matter what you say… I’ll turn away.
Mandelman out.
Martin,
Thank you. this is the most thought out, clear, and concise discussion of this topic I have seen. And from someone with with no vested interest. I too have been confused and frustrated by the socialist rhetoric I have heard about this, and other business blasting in the past few months from the administration and other crooks running this country and our whole banking system. Those who will profit in the billions by their thievery and inside connectins to politicians, regulators, and greedy monopolys, are happy to trounce those who are struggling to survive. What seems to be missing in some of the debates and blog discussions, is when you back a junk yard dog in the corner, he is going to come out biting and fighting. The backlash against the unfairness will come out in many fashions the feds have not even thought of yet. The battle is on between the big powers and the agile, angry small business person.
No, thank you for saying that. It helps to restore my faith that other people have had about enough of the crap be shoveled at us of late. Wait for the government program? Can you imagine? Waiting for a government program? While you stress out over possibly losing your house. Please... how stupid does he think we are? Once I tried to call the IRS to find out where I should send them money and it took four days.
What kills me is that now that we finally have a private sector solution that doesn't cost the taxpayers a dime and makes the banks participate in the solution to the problems they created... our president says that we shouldn't use that solution... because we'd have to pay a fee? That's the reason? Really?
"Wait there, kids... the government will come save you soon." My ass. What would you like to be that his housing rescue plan doesn't end up actually rescuing anyone.
After all, the only people that qualify are those with a mortgage balance no more than 5% over appraisal. Underwater by no more than 5%? I sent him a note letting him know that home prices have obviously fallen a bit further since the last time he looked it up.
Besides, if you're only 5% underwater, do you really need rescuing?
Stay Tuned: Coming Up Next...
The Employer NO CHOICE Act... Christmas Could Come Early This Year for the AFL-CIO and Friends.
Trust me. I am in this business of trying to help confused and sometimes desparate homeowners get loan "relief". Every thing you say about the problem and the complete failure of the govt programs is exactly correct, and is lilkely to bigger and worse.
I'm asking hypothetically because I don't own a home, but there are a lot of scammers who take people's money and do nothing. So how do you know a company is legit? If a company's a scam, they are obviously going to keep scamming by giving phony statistics, testimonials, etc.
Good commentary. However, I can't fault the Administration on steering borrowers away from modification companies. The problem with unlicensed modifications is overwhelming- especially in California and Florida. Despite these states having strict laws involving advance fees and foreclosure consultant licensing, companies completely disregard the laws.
For every borrower that has been helped, there's many more that paid thousands only to lose their home or obtain loss mitigation assistance themselves.
I take no issue with companies that abide by State laws, use approved contracts, and only hire duly licensed sales persons/consultants that are bonded and supervised, and deposit borrower funds in a trust account until the work has been complete (except Florida which does not allow for advance fees at all- even by attorneys).
Unfortunately, too many companies do not deal with licensed consultants and instead pay referral fees to unlicensed and non-bonded individuals. Some of the "referral" solicitations I receive (almost daily) promise to pay for the referral within 5-10 days before the modification request has been made. Some companies offer a turn-key website and marketing support. I can't swing a cat by the tail in So Cal without hitting an illegal mod company. Just because regulators can't keep up with it doesn't make it right.
Dealing with people in default requires a lot of knowledge and a higher skill-set that is above and beyond the level of an average subprime salesperson/loan officer. Often times, borrowers need help from a variety of sources. The problem with advance fee modification companies is that it uses up precious borrower resources that may be needed elsewhere- such as a bankruptcy attorney or perhaps their mortgage. Perhaps if these companies focused on getting paid after the modification was complete - it wouldn't be open season on desperate borrowers.
While I appreciate your sentiment, and will acknowledge that there are some good companies out there, the bulk are unlicensed hacks. This makes for a very dangerous environment for borrowers.
Hopefully, bankruptcy cram downs will be passed so borrowers will be able to obtain mortgage relief in bankruptcy courts.
Hire and Attorney who gets it and sue the *&^&*&^%$%er's. The chances they defrauded the consumer are high. The chances they lost your note are higher. The chances they will not find your underwriting, appraisal, etc., are even higher!! YOU WILL WIN BY DEFAULT IF YOU ONLY USE THE LAW TO PROTECT YOU.
This starts with an ATTORNEY who gets it. Borrow the money, negotiate a flat fee or hybrid or payment arrangement. HIRE THE ATTORNEY WHO GETS IT!! Got it?
Attorneys aren't always the answer, rocket...just like doctors, mechanics and substitute teachers, they aren't all the same. And the law is not always going to protect you...Ask Madof's clients. The Government programs will CERTAINLY not solve the problem. I spent 3 weeks just trying to get the IRS to find a check they had cashed of mine but never posted to my account.
And I'll bet there are a lot more good loan mod companies than bad ones. Its just that the Fox news' of the world, the lazy reporters who would rather report the "safe" bad loan mod company story the a more balanced, investigative one...
Do your homework, ask potential suppliers for references, use the internet to see if there are criminal charges, scam reports, etc.
Thanks, Mandelman...keep em coming!
All attorneys are not created equal. Most do not GET IT because foreclosure defense is a new field which was not needed (FOR THE MOST PART) prior to 2003.
To those who think I was attacking Mr Andleman, this is simply - not true. I was just suggesting that an Attorney should be consulted with regarding foreclosure defense - especially an attorney who "gets it!"
How is that an attack on him?
Oh well, here's my apologies if I was misunderstood.
But, my point is still very valid. The sheeple are confused enough. A good Attorney (who gets it) and a loan audit should be the first place a consumer starts. WHY GET SCREWED (POTENTIALLY) A SECOND TIME AROUND!?
The article did not mention that, did it? I could have missed something.
To those who think I was attacking Mr Andleman, this is simply - not true. I was just suggesting that an Attorney should be consulted with regarding foreclosure defense - especially an attorney who "gets it!"
How is that an attack on him?
Oh well, here's my apologies if I was misunderstood.
But, my point is still very valid. The sheeple are confused enough. A good Attorney (who gets it) and a loan audit should be the first place a consumer starts. WHY GET SCREWED (POTENTIALLY) A SECOND TIME AROUND!?
The article did not mention that, did it? I could have missed something.
Rocket, please don't take this the wrong way, but I am not sure what you mean by an attorney that "Gets it".
Not all loans were fraudulent, and most were actually made in good faith. Not all borrowers have the stomach for litigation and legal expenses. The lost note defense isn't foolproof and chasing that rainbow could cost borrowers thousands in legal fees and ultimately end up costing them their homes. In fact, all it really is at this point is a stall tactic. The original note is not the only document courts recognize as evidence of the debt.
Besides, isn't there something inherently dishonest by trying to avoid a debt made in good faith due to a technical issue? Its one thing to stall a foreclosure, its another thing to try to dodge a bona fide contract. Why should borrowers be able to enrich themselves by avoiding their contract? That would be stealing. Stealing is wrong regardless of who the thief is.
While I agree that in cases of fraud, abuse, or noncompliance, the borrower should seek an attorney. I also believe that if the borrower is facing imminent foreclosure, the borrower should immediately contact an attorney, but I do not believe that attorney's are the end all, be all for most borrowers. If the borrower simply needs a mod, an attorney could complicate the issue and add an unnecessary cost burden.
Borrowers in trouble should seek help and information from a variety of sources including: HUD approved default counselor, HUD approved consumer credit counselor for CCCS assessment/pre-BK counseling, BK attorney, CPA or other tax professional, real estate broker, lender/broker, and in the event of fraud/abuse/compliance issues- a qualified attorney. More often than naught, a borrower can navigate the modification or short sale process with the help of honest professionals without paying thousands of dollars to attorneys or mortgage consultants.
Rocket, Its okay not to agree, and I appreciate what you are doing for ML. I also agree that dealing directly with an attorney makes a heck of a lot more sense than dealing with "attorney backed" loan modification firms. But, I would rather see BK attorneys used more often- especially if BK cram down legislation makes it though.
Mandelman- good job. Like your style. Don't agree with everything, but appreciate hearing your opinions.
That business is unregulated, full of the idiots and criminals that brought our honest business down and hurts people. YOU DO NOT NEED A THIRD PARTY TO GET A MODIFICATION.
Case in point. I had a colleague that had done loan modifications in 2008 and made 160k doing it.
Do you know how many loans he modified?
-0-
ZERO.
Put these guys in jail too.
Phillyguy...so you pal made $160k ripping people off, and you say you don't need a professional to do a Loan Modification? There is a company in SoCal that modifies 20-25 loans PER DAY...has the balls to put the number they modify on their website, and if you ask them, will show you these mod summaries on a daily basis. There is another firm in FL that is modding 100 loans each week, and puts every deal on their website. Yes, there are rip-off artists (like about half the mortgage brokers out there) and idiots (like about half the mortgage brokers out there) but there are a few firms actually helping people...daily. Lets try to figure out a way to keep these guys in business long enough for this thing to turn around and we won't need these types of forums any more.
I met with an investigator from the California Department of Real Estate ("DRE") yesterday. He is tasked with investigating loan modification companies. When we started talking, he said that the DRE was investigating loan modification companies to "send a message" to consumers that they're being tough on the industry.
Like Phillyguy (I love Philly, by the way) he started out by saying that people don't need a loan modification company, "they can just contact their bank directly". I responded by saying that I found that viewpoint terribly insensitive, especially coming from a state agency. He asked why I would say that, and seemed genuinely confused by my response. And from that alone I could tell that he had no idea what was involved. He had been taught a line: "people can just call their bank directly," but had absolutely no real life experience in doing so.
And I'm quite sure I know from where this line is coming: a bank. Someone at DRE, or in the White House in the case of Obama's views, contacted a banker... or two... and asked that banker if someone could just call his or her bank and request a loan modification. And the banker or bankers replied: "Yes, of course they can. We'd be happy to help. We help people every day. We're the most helpful people in town. We love helping. We're here to help. If I personally don't help someone every day, I just don't feel right. I'm a helping fool. Helping all the time. Help, help, help. Can I help you with anything right now?"
I'd like to find that banker and slap him. Then I'd make him call his bank and ask for help while the cameras were rolling and the microphone was on. Just to watch him sweat, because he would be sweating his behind off, believe you me.
Let me absolutely assure everyone of something, and this is also how I responded to his confusion at why I would say he was being insensitive:
Every single person that says that you can just call your bank and ask for help with a loan modification is someone who never has, and likely never will need to. Frankly, I'm getting really tired of listening to rich people talk about this subject. One of these days I probably am going to end up slapping some rich guy just for having an opinion on this subject.
See, I'm not talking theory, and I'm not out interviewing rich people. I'm talking to real people... real working class folks that have never made a six-figure income and don't recognize the new 6-Series BMW from a block away. When they vacation, they stay with relatives or they camp. They think the Four Seasons is living in the north east.
Regular people that are nervous talking to bankers when they're depositing money in the bank... let alone when they're behind on their mortgage payment, think it's all their fault, are embarrassed and humiliated, and scared to death that they will lose everything and have to return to a small apartment that smells like ass. Those people.
While it's technically (or maybe theoretically is a better word) correct that an individual can call their bank directly, it is not something that many (I want to say "most") people can do. Nor is it something that I would recommend to most people I know. There are many reasons I feel this way, but I'll try to cover the highlights, as I told the guy from the DRE:
1. Not everyone is comfortable calling to negotiate with their bank. Period. And don't you dare put someone down for feeling that way because we all have flaws and I'm quite sure you have your share. My own wife is a bit that way, and she's a college graduate that will run circles around most anyone in many areas. She's great once she gets to know someone, but as far as confidently calling a stranger to negotiate in an area she knows little about... forget it. She's just not that comfortable on the phone. She also is often a little intimidated by authority figures, which to her, can be the manager at Nordstrom.
Me? I'd call Donald Trump and tell him he's fired without giving it a second thought. I'd stand on the floor of the senate any day of the week. I've never even met an authority figure. (Except USAF Chief Master Sergeant Charles Toms whom I haven't seen in 20 years, but just in case he's reading this...)
I've met people who are insecure about their English, their education, their looks, their skin color, you name the insecurity and I've met it at one time or another. I have a close friend who's a war hero from Viet Nam... 19 confirmed kills, helicopter gunner... Purple Heart, Silver Star... he'll knock your block off if you push him, and he's funny as hell at parties... but truth be told, he's kind of shy. Not good on the phone. So? Does everyone have to be good on the phone all of a sudden? Everyone should be able to feel just fine negotiating with a bank all of a sudden?
To tell millions of people that you can just call your bank and they'll help you with your loan modification is just plain insensitive. You might well tell them to go ahead and lose their home to foreclosure tomorrow, because that's about the chance they have of being able to do what you suggest.
2. Next, the DRE inspector guy, whom I ended up liking a great deal by the way, said: "What about the government programs?" He had changed his tune since realizing that I had actually tried this, and he had only memorized a line. My response was simple: There aren't any.
Look, there are something like five million people out there looking for information, scared, nervous, lying to their friends and family that everything is okay... desperate that no one find out that they are "one of them". Most of these people heard that sub-prime borrowers caused our nation's economy to slide off a cliff and they feel terribly guilty. They didn't mean to hurt anyone, they just wanted a house and thought they could swing the payments.
They didn't see The Great Depression Part Two coming around the corner. They didn't stop to consider that the banks might over-leverage their synthetics and derivatives and that the securitization process was too complex for the bond ratings agencies who were being paid for their ratings... and that the FASB regulations were changing and the impact that would have on hard to value assets like CDOs, or the credit default swaps were trading in an unregulated market as a result of... oh shut up, shut up, shut up.
No one saw all that. The Secretary of the US Treasury missed it. The Chairman of the Federal Reserve missed it too. The CEO of GM was obviously caught by surprise... he didn't even think that perhaps flying in private jets to ask the taxpayers for money might be in bad taste. Talk about being OUT OF TOUCH! Warren Buffet didn't see it coming. So why should a teacher from Riverside, or a bus driver from Michigan, or any other normal individual on this planet.
The government program is ridiculous. First of all, it's going to help a lot fewer people than everyone thinks. Second of all, waiting on hold for a week is something most people don't want to do. Thirdly, HUD doesn't actually handle your loan modification, they just provide foreclosure counseling, which is just stupid. You can get that at the local community college and you don't even have to wait on hold or depend on the government to call you back.
For anyone who thinks it's easy to get a loan modification, it's not. Period. Even for the professionals it's not... want to know why? Remember Mr. Helpful Banker a few paragraphs above... well... he was lying. He had no idea what he was saying. He doesn't even know who actually owns your mortgage anymore. He's only servicing it. He couldn't find it given a year and a whole team of experts. Why was he lying? Because he's scared and insecure as all hell. He can't believe he's not under indictment already. He knows he did a million things he shouldn't have, but he was just hoping he'd be able to find a chair when the music stopped. When someone from the government calls and asks if people can call the bank directly and get a loan modification, he says "YES!" He's a fool.
Bush's program didn't work at all. The damn thing keeps sending out press releases about how many phone calls they're taking. Shut up, shut up, shut up. People are losing their homes to the tune of something like 6,000 a day. And I'm tired of rich people telling others what they should do, or could do. Why can't they just use the ONLY solution that's working in this country... I know, they'll have to pay a fee. So what?
Lastly, the loan modifications that result from the negotiation between bank and homeowner default at the rate of 60% within the first year. And if you can't figure out why that might be, then read my new article... I'll post it now...
Thank you. this is the most thought out, clear, and concise discussion of this topic I have seen. And from someone with with no vested interest. I too have been confused and frustrated by the socialist rhetoric I have heard about this, and other business blasting in the past few months from the administration and other crooks running this country and our whole banking system. Those who will profit in the billions by their thievery and inside connectins to politicians, regulators, and greedy monopolys, are happy to trounce those who are struggling to survive. What seems to be missing in some of the debates and blog discussions, is when you back a junk yard dog in the corner, he is going to come out biting and fighting. The backlash against the unfairness will come out in many fashions the feds have not even thought of yet. The battle is on between the big powers and the agile, angry small business person.
No, thank you for reading my column and understanding the situation. So few do. Our president clearly does not. The whole idea that I should wait for the government to come help me, when I can help myself is nuts. The new housing rescue plan is nuttier. You can't be more then 5% underwater? Well, then it's a good thing real estate hasn't gone down all that much, isn't it. And it only applies to loans securitized by Fannie and Freddie. Whew, that's a relief. Wait a minute... what's securitized mean?
And my credit has to be good, and my payments have to be more than 38% of my income, and my bank has to participate, and my tax returns... oh please.
I have an idea. How about this for a suggestion. Whomever screwed up the secondary markets by improperly rating bonds, and whomever packaged the derivatives so that no one alive could understand what was inside... and whomever allowed this thing to melt down this far... you guys get together and do whatever you need to to put it all back together again. You broke the God damned world... it's your responsibility to fix it. We'll give you a couple of months to get it done. Let us know when you've got what you broke working again.
After that, I'm going to start publishing articles that tell people how and why they should pour cement down every drain in the house before they lose it to foreclosure. Do you hear that bankers? Do you? Because I'm not kidding about this. By the time I'm done with you, every time you foreclose on another home, it'll cost you 3x its appraisal value just to flush a toilet in there ever again. And then I'm going to start giving away termite farms. And then... I can do this for a long, long time... I'm not proud... or tired.
Stop telling people the government is coming to the rescue when we all know damn well how that always works out. Check out a loan modification company before you given them a dime. And if you're defrauding people with loan modifications... throw away the key. C-Ya. But leave the legitimate companies alone. They're doing great work!
They've dropped the ball so many times on this that they shouldn't be allowed to play anymore. And they give out advice that they've clearly never tested. I'm tired of hope and change already. I want to see answers and solutions and an economy larger than that of Peru.
Here's a few ideas:
1. Ask the company for references at banks... someone at a bank that they've worked with to modify loans.
2. Ask how many loans they've modified over what period of time. Not just generally, but specifically.
3. Ask if you can see their internal monthly or weekly production reports, you know the internal reports that show how many loans were modified and how many reached some other resolution.
4. Check the company's credit report, call the state Dept. of Real Estate to see if any complaints have been filed, and call the references of happy clients... call them. It's harder than you think to get private citizens to lie for you and few people are good enough actors to deceive you on something like this. You know... ask questions like: So when did you buy the home? Why dod you get in trouble and need a loan modification? How long did it take? Did you recommend others to the company? Would you mind telling me who? Do you have their numbers handy? Oh yeah, when did you buy the home?
5. Best of all... Visit their offices. If they're too far away and you can't verify any other way, skip it and use someone local.
Mandelman,
You have such a clear understanding of the problem, I would have thought you were in the business. If you really want to make a difference, you need to WRITE A BOOK NOW! It will place you on the national news overnight, where you can finally explain to the news media, regulators, as well as the idiots in these banks what is really happening. Turst me, bad Loan Mod comapnies is the least of these homeowners problem here. The real problem is everything you say about the govenment ineptness, bank arrogance and stupidity, and massive greed of the powers in control of this mess.
You know what... I think you're right. Book in progress. Thanks!
Nice. Let me know if I can contribute any tecnical support for the book, from the inside so to speak. Also, please consider supporting and promoting my "Credit Moratorium Proposal" as summarized on my blog page: http://mortgagedave.blogspot.com/2009/01/proposal-for-housing-market-stimulus.html ( Email me at dave@wrfco.com for a complete pdf version. ) I would enjoy discussing the execution of the proposal and grass roots efforts to get it supported by congress, the media, and the housing industries, and quickly implemented.
This is possibly the single most powerful way to get the 5-10 million displaced, foreclosed homeowners quickly back into home ownership and to help stimulate the housing market in a clear and low cost manner. I am asking media persons like your self to promote the idea. As the proposal author, I hope to get credit for it, but the end result is the important issue. Thanks.
Dave... I will absolutely contact you for technical support and I'll check out your link to your Credit Moratorium proposal. Get back to you after I do. Thanks...
This starts with an ATTORNEY who gets it. Borrow the money, negotiate a flat fee or hybrid or payment arrangement. HIRE THE ATTORNEY WHO GETS IT!! Got it?
Go RocketRob!