Yes, you heard it right and I am going to stand by these comments and this post 110%.
Non-profits serve a great need in helping homeowners work out their loans. But in their attempts to be of service, they are actually performing a disservice to the homeowner. They are missing the most important ingredient in assisting a borrower that is having mortgage difficulties and that ingredient is the legal layer of the equation.
The California Reinvestment Coalition, a group of nonprofit organizations and public agencies that advocate for the poor and minorities, surveyed 38 out of about 80 independent counseling agencies in the state that are certified by the U.S. Department of Housing and Urban Development.
The coalition said the results suggest the mortgage industry hasn’t helped borrowers avoid foreclosure ‘to any significant degree.’
The agencies, which served 8,174 borrowers in December, were polled on the extent to which 12 of the nation’s top home loan servicers were working with clients to make loan payments more affordable. Servicers collect payments on loans.
I disagree with this survey because the facts are that lenders and servicers have aggressively stepped up their efforts to offer loan modifications to struggling borrowers.
As of January 1, 2008, I have seen a huge jump where I have personally witnessed and been involved with several homewers that have fought their lenders for for months and all of a sudden they all obtained loan modifications within a 2 week period.
The problem is that the system is bottle necked.
The simply do not have enough staff to handle the loan workouts that need to be done. I suspect that they are operating at about 25% the capacity of what is needed to get serious about this mortgage clean up. Naturally, you are going to have a lot of people fall through the cracks into foreclosure and many could afford their home, just not their exploding loan.
Are these HUD housing counseling agencies doing their job correctly?
Most non-profit housing counseling agencies are staffed by consumer advocates who want to help as many people as they can. But the facts are that many of these people do not understand the real estate and mortgage business. Nor do they understand how to identify federal and state violations that may have been committed during the loan origination process.
These violations, if found, can help the counselor assist the homeowner in what I like to call a “forced loan modification“. The basis of a forced loan modification are on the threat of legal action if the lender and borrowers are not able to mediate their legal issues.
My thoughts are that if they know how to use these laws properly, then they could get the lenders or servicers attention much quicker. Thus avoiding foreclosure and obtaining a favorable loan modification for their client.
More from Forbes:
A majority of those who took the survey also said servicers that opted to modify loan terms typically fixed interest rates for only a year.
‘These short-term modifications most likely only delay the problem, and are akin to giving the borrower another bad loan with a short period of affordability followed by increasing payments that may be hard to make,’ the coalition noted in its report.
Only six of the 38 agencies surveyed said loan modifications were very common, while 14 said they were not common.
The Truth in Lending Act and RESPA is rarely if ever used by these non-profits to help mitigate damage to homeowners and this has got to stop!
I am pleading with The California Reinvestment Coalition and any other non-profit agencies to seriously look into “legal layer” of the housing counseling equation. If you all truly want to help predatory lending victims that are walking or calling into these non-profits for help daily, then you will do what is right and advocate for this to be implemented ASAP.
{ 3 comments… read them below or add one }
Wamu, you must be kidding who writes the guidelines for the executives and Ceo’s, like Mr. xxxZilo at xxxWide themselves?
what’s wrong with the boards? they don’t have enough people capable in doing good sound business guidelines and calculations?, and you guys, Executives, Ceo’s talking about Work?..What work! I can tell you so many things in how to run your business to Wamu, and the other banks, at relative fair cost! not billions!
if you guys need a person to run your business please let me know!
I been running business for long, once I see the all picture of your business, I can tell you where you need help! and how you can benefit your people working for you and specially your clients! borrowers and if there are no borrowers, there is no businees for you either! let’s help the borrowers, take the money out of the executives and Ceo’s as under the Main Executive orders, compesations should be based on the final results of the portfolios and produts you guys buying, selling or promoting! if banks are buying portfolios back or keeping in their books based in the yield returned that will reduce your compensation, if you want money earned it!.. because people under you guys are the ones are doing your job!.. you just collecting!
Thank you,
We have been fortunate enough to get our loan modified ($270,000@5% fixed)but unfortunately we have a $70,000 2nd/signature loan that filed a notice of default. We have at least $100,000 equity left, but I’m not sure what to do. We have lived here for 20 years, and don’t really want to move – and only have 30 days supposedly.Loss of job and change of profession was the main reason, but were tapped.Is it possible the Loss Mitigation Department @ Chase would tack the other loan on, that would solve our problem?
I too have been in the modification limbo for now three months
each time my call was answered and I was told not to make a payment because at the time only one month behind and it would show as a late payment only, and a modification wasn’t necessary even though my interest rate was/is 10.35,this snowball started in November 2007 with CountryWide when my pay scale changed to avoid our company going out of business and little or no jobs are available in our county. Less take home pay ment my 2800.00
month salary went to 1200.00. A blemish on my credit history, I took in a border in attempt to make my 1633.00 payment to keep my home of twenty five years Now all I get is the you’re being reviewed and a final decision will be made on April 1st.