Yes, I said what a JOKE! But let me go further and say after meeting with executives from Wells Fargo, Bank of America and Chase; they feel the same way. The biggest problem with loan modifications is that they give false hope to people. The second biggest problem is that 70% that get approved are back in foreclosure within 9 months. The 3rd problem is they are not logical in their approval process for a loan modification.
Let me address the last problem first, number 3. I have several friends, colleagues, and past clients that are doing everything they can to keep their home. Some have lost their jobs, some are under employed and some have radically reduced incomes. This pool of people are perfect Short Sale candidates. But they don’t want to. They are drawing savings and retirement savings to keep their home. A loan modification for these people that are fighting for their home makes sense, doesn’t it.
Not to the banks. They don’t want to add to their failure rate of 70%+. Each of the individuals I am referring to has managed to keep their home. Why should it matter if they have a job or are pulling from savings? If they are such a high risk, then why not try? The banks have already designated them foreclosure or short sale, yet they fight on.
There is not a whole lot to say about #2, 70% failure rate in anything is horrible. This is why the Federal government came out with HAFA. They had to do something when HAMP failed. What is HAMP? It is the federal modification program that was a complete FAILURE! What is HAFA? It is the government’s way of saying DO A SHORT SALE. Because all studies show Foreclosures net the bank much less than a short sale near market value.
Well, time to address the biggest problem with Short Sales and that is the False Hope! I have spoken to dozens of people waiting for their loan modification and even more people that got foreclosed on while waiting. I asked bank executives how they are going to stop sending the false message. Their answer was: it is difficult, but basically if you have been rejected or it is taking more than 6 months to get approval, chances are it is not coming. Let me be clear, that was my interpretation of what they said. They all understand the problem, they did say people are not understanding “NO”.
If you or anyone you know is struggling, have them call me for a FREE 1 hour consultation. Oh, by the way, they told us the best way to get you to do a Short Sale was to promise a loan modification and when that failed we were connected for the Short Sale. I hate misrepresenting the truth! Call me, I will give you my opinion. If loan mod is possible, I will suggest that route, but if not I won’t lie to you!
Update on federal loan mods in metro Phoenix
by Catherine Reagor
The federal Housing Affordable Modification Program is nearly two years old, and so far it has helped fewer than 27,000 metro Phoenix homeowners lower their mortgage payments to afford foreclosure.
At the end of 2010, about 5,000 homeowners were in trial modifications. The federal government defends the program but is obviously as frustrated as many struggling borrowers with lenders. The $75 billion HAMP program was supposed to help 3 to 4 million eligible U.S. facing foreclosure. It hasn’t only failed to meet expectations in metro Phoenix. The number of U.S. homeowners to avoid losing their homes through HAMP is less than one million. Can something be done to overhaul the program and spend the money to help homeowners and struggling housing markets?
Thursday, February 17, 2011 at 02:31 PM
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