Understanding the Foreclosure Process

Posted on February 10, 2010 by Duane

Millions of Americans who are struggling to save their homes from foreclosure are trapped in a minefield of disappointment and misinformation and the banks, lenders, and servicing companies are all to blame.

Instead of trying to help the homeowner they actually make it more difficult and I know this to be true from firsthand experience. I sometimes pretend to be the homeowner calling the bank for general information on what to do next (and yes this is with my clients consent) and their form of communication is to scare you into submission.

We have seen the fourth revision of the current program and this is the third program the government has put out to help homeowners avoid foreclosure. Homeowners, housing counselors, consumer advocates and attorneys working with borrowers report that the latest effort is falling far short of its original goal.

In some cases, lenders are moving to foreclose even after homeowners get approved for loan modifications. I know this be fact and the reason is simple, but also avoidable. While the loan is being reviewed the collection process continues. The loss mitigation department will tell you that while in review the auction date will be postponed, but not delayed so if you don’t stay on top of your case you will become one of those unfortunate statistics. Click on this link to read our previous post and a great 60 page article titled “Why do lenders foreclose when then can modify”.

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Banks Are Too Large And Failure Is Not An Option

Posted on December 31, 2009 by Duane

While taming the monster we have allowed it to grow.

Bank of American buys Countrywide and Merrill Lynch while Wells Fargo buys Wachovia and we allowed it to happen under the pretense that if the government didn’t help these institutions there would have been a collapse of the financial sector.

The Obama administration this month has extended the $700 billion financial bailout program until October 2010, setting up a struggle between Democrats who favor using some of the leftover money to help generate jobs and Republicans who say it should be used to shrink soaring budget deficits.

I personally have mixed emotions about this, but I will hold my rant until another time and focus on the two statements made here.

First, we need to get more control over the financial sector with restrictions and oversight on the big picture and not just the immediate problem. Ask the questions smart questions about how we help the unemployed pay their mortgage or should we pay the bank before or after the permanent loan modification.

Keep in mind that we allowed the banks to borrow money from the government at an interest rate of 1 percent to stay solvent and we allowed them to charge the consumer an interest rate anywhere from 18 to 30 percent on your credit cards. What we should have done was added a stipulation preventing the banks from paying bonuses two or three years from paying back the loans.

With the sale of stock options and some other creative financial maneuvering it is no wonder they were able to pay back the money they owed – and by doing so they have freed themselves of the restrictions the government has placed on them regarding bonuses and other perks.

Second, the administration insists the bailout funds are still needed to prevent further turmoil in the banking system. In announcing the decision Wednesday, Treasury Secretary Timothy Geithner said extending the program also will help homeowners struggling to avoid losing homes to foreclosures and small businesses having trouble getting loans.

My feeling is that these funds will only help struggling homeowners avoid foreclosure if the government has learned anything from this past year. Don’t pay these banks until they have completed the permanent loan modification and somehow get more or have more control over the program and how it is being implemented. In other words help more people faster!

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Making Home Affordable Program (MHA)

Posted on October 31, 2009 by Duane

I read a report recently indicating that lenders such as Bank of America Corp. and Wells Fargo and Co. have lagged behind government expectations in offering loan modifications to those homeowners in need and both banks have received billions in federal bailout money.

And we all know that while the banks drag their feet getting homeowners approved for loan modifications their Collections Department is actively and aggressively calling the homeowner in an attempt to collect the mortgage payment.

According to our experience in working with these lenders they have adopted a policy that requires 60 to 90 to review your documents and get back to you with an answer regarding the approval or denial of your loan modification. However it takes the collections department days or weeks to repeatedly call the homeowner demanding payment or else.

And let us not mention that the banks are borrowing money from the government at an interest rate of 1 percent to stay solvent and charging you an interest rate anywhere from 18 to 30 percent on your credit cards. With the sale of stock options and some other creative financial maneuvering it is no wonder they were able to pay back the money they owed – and by doing so they have freed themselves of the restrictions the government has placed on them regarding bonuses and other perks.

Making Home Affordable (MHA) was created to help an estimated 3 million to 4 million borrowers over a three year period avoid foreclosure, but the government program will not meet those goals as long as the banks and lenders continue to drag their feet.

The Congressional Oversight Panel, charged with making regular assessments of the $700 billion financial rescue fund enacted last year, said the Treasury Department should consider whether to improve the current $50 billion program or adopt new programs to meet an expected rise in foreclosures fed by increased unemployment.

I feel they should not look at adopting new programs, but instead work on fixing the current program. The government moves too slow and to adopt a new program would result in major setbacks, but if they make the necessary changes to the current program based on the obvious mistakes of the last six months they could actually have a working program in place.

So instead of only helping approximately 650,000 homeowners they might actually be able to help the 3 to 4 million people they set out to assist- 3 million or even half of that number would be a tremendous benefit to so many people and would be considered a successful campaign.

National Foreclosure Prevention Services is committed to helping as many homeowners as we possibly can stay in their home by offering Loss Mitigation Services and if the government takes a common sense approach to the problem we will be able to help many more people.

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