Sarasota Realtor sees loan modifications “destined to fail” because mods do NOT confront the real problem driving foreclosures.
Sarasota homes need help modifying loans to prevent EVEN more distressed properties to a flooded market.
http://www.makinghomeaffordable.gov/modification_eligibility.html
“I used to be on top of the world,” Chris says while sitting motionless looking toward the sky!
In a flash, the bottom fell out of Florida’s economy, pink-slipping nearly every single family or so it seems.
Today, Chris makes a fraction of his former salary. Times are tough, and he cannot afford his monthly mortgage payment. Instead of walking away, he’s trying to save his family’s home.
Saving his family’s home has proved to be much more challenging than he once had thought.
He, as with millions of people facing foreclosure, thought the “Obama Plan” would help keep families in their homes.
4% get mortgage help!
Treasury officials, in the first comprehensive tally of permanent modifications made, say that loan servicers have converted 31,382 people from trial adjustments to long-term assistance as of Nov. 30, but 30,650 people in trial modifications have been denied.
That means that only about 4% of troubled borrowers have received long-term help under the Obama administration’s foreclosure prevention program.
A nearly equal number of trial modifications have been denied permanent assistance, the report showed.
The reasons include not making monthly payments on time, not submitting all the necessary paperwork and not qualifying for reasons such as insufficient income.
Lost or misplaced paperwork
is NOT the real issue!
Homeowners claim that banks keep losing paperwork, but banks claim they often don’t get it in the first place. For 3 years I have worked short sales and loan mods. Without doubt, it’s not homeowners (or realtors) not submitting the paperwork.
It’s the BANKS losing or misplacing the paperwork WE send them.
However, let’s not lose sight of the real issue: expeditiously moving through the modification process. Clearly, that’s NOT happening, as homeowners desperate to save their homes are more than willing to re-send lost or misplaced paperwork.
For heaven sakes, Banks and Servicers, just ADMIT you don’t have the paperwork and request we re-send it.
Don’t LIE to us for months, before accusing US of not sending it. YES, this happens often…too often!
Around 375,000 people should be eligible to receive long-term relief by year’s end, but only one-third of homeowners who have made at least three trial payments have submitted all the needed forms. Banks and government agencies have hired outside companies to knock on borrowers’ doors to assist them with completing the paperwork.
Chris has jumped through all of Bank of America’s hoops, hoping for a monthly payment allowing him to stay in his home. He doesn’t care about owing a bazillion more than what his home is worth. He doesn’t care that BofA wants to throw onto the backend the difference between contracted monthly payment & proposed payment.
He NEEDS affordability until he can regain his income.
He doesn’t want a handout, just a hand up!
Yesterday, Bank of America (going off who knows whose numbers) tells Chris they’ll lower his payment by $55.00 /month. WTF?
Clearly, this is NOT 31% of his gross monthly income (combined husband & wife).
What’s wrong here? Losing/misplacing paperwork & computing bizarre (inaccurate) income/expense numbers troubles Chris and his wife.
What happens if BofA’s “offer” is not
enough to get to an affordable payment?
Taken off the government’s Making Homes Affordable website, it states:
“If a 2 percent interest rate does not result in a payment that is affordable (no more than 31 percent of your gross monthly income), your servicer may:
- First try to extend your payment term. At the servicer’s option the term of the loan could be extended up to 40 years. Extend the loan term to 80 years. Most people today on loan mods simply are buying time with a lower payment. They have NO interest or desire to owe more than the property is worth. Perhaps the banks see the same issue from their position. It’s a great game of “Chicken.” Who will flinch first?
- If that is still not sufficient, your servicer may defer a portion of the principal amount you owe until the maturity of the loan. This is called a principal forbearance. However please note that with a forbearance, you will still owe the principal; but repayment is deferred until a later date. Without principal reduction, the housing market in hardest hit areas will not recover for years. Go ahead, blast me for this belief. I’m one person with one opinion. I’ve been saying this since ’07.
- A portion of the principal could be also be forgiven. This is optional on the part of the servicer. However there is no requirement for principal forgiveness and there is no guarantee that your servicer will offer principal forgiveness.” Clearly, this is NOT happening or even considered despite the alternative for the debt owner.
Sarasota homeowners are not alone on the Titanic. As retail and services continue floundering more and more people are worried about making their mortgage payments. The ice chunks pounding on the Titanic inflict damage well beyond lower monthly payments. Please leave me a comment. Happy talk is most welcomed. Whatever optimism you can breathe into Chris’ desperate situation to negotiate an affordable monthly payment with BofA punctuates an economy in serious trouble.
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