Polishing a turd definition: The act of trying to make something hopelessly weak and unattractive appear strong and appealing. An impossible process that usually results in a larger, uglier turd.
Example: She tried to look more attractive by getting plastic surgery, but let’s face it, you can’t polish a turd.
“Bottom line America, thousands of homeowners are just walking away from their underwater homes every month and any loan modification plan that does not address “true” market real estate values is a plan made to fail and a mortgage turd that cannot be polished.”
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Out of all the US government officials and consumer protection agencies, no one beats Sheila Bair and the FDIC when it comes to being the most vocal and logical in regards to possible solutions to our nation’s mortgage and housing crisis. Take for instance, the FDIC’s new loan modification plan that is boasting that it may help keep 1.5 million homeowners from losing their homes to foreclosure.
But what if these homeowners are not satisfied with the loan modification they are offered?
This past week my 10 year old son just came up to me as I was blogging away as and he said, “Dad, this mortgage and housing crisis is just like polishing a turd. No matter how much they try and polish it to get it clean, it will always be dirty and smelly.” I laughed hysterically, “Yes, son, it’s exactly like that!”
Apparently he was correlating the world’s financial crisis to a math crisis in his classroom that day in which his teacher and he were trying different “possible” solutions to a difficult algebra equation. His teacher ended up throwing his hands in the air and said, “This is like polishing a turd, impossible!”
When my son said that, I said, exactly and it was a turning point in my thinking.
I operate a loan modification processing company for attorneys in Corona, California and loan modification rejections by homeowners is the “hot new” fad. But yet no one is talking about it.
It’s a huge new trend that I do not see ending anytime soon. Our company Loan Safe Solutions are noticing approximately 1 out of 3 homeowners in files that we are currently processing are hoping for some type of principle reduction down to current market values in addition to wanting their rates reduced.
Most all these homeowners are warned by the law firms that lenders are simply not offering principle reductions, but many still take their chances as one last ditch effort before they just ditch their homes. Some loan modifications offers from lenders come back to homeowners with below market rates. I have seen rates as low as 2-5% and many borrowers have to bring zero dollars to the table, even after they may have lived payment free for 6-9 months and still may owe tens of thousands of dollars.
Many people would think that these kind of offers are awesome deals and these homeowners get to keep their home and will live happily ever after in their American Dream. Yes, this happens often, but almost just as often as their are success stories, there are many who simply are not satisfied. Many take the deal as a temporary fix, but plan to walk away as soon as they get a grip on their financial lives.
Right now it’s as if we are trying to polish these mortgage turds and there simply is no way to get them clean. In fact, the loan modification stench that is coming out of the FDIC ran Indymac, Countrywide, Chase and the other mortgage servicers is just too much for many homeowners to take.
For example, an offer is made by the lender to a struggling homeowner that will definitely help them in the monthly payment departments and they can now afford to live. But in 99% of the cases, they may owe for example, $30-50,000 in late payments and fees and the offer includes adding those fees to their already underwater home mortgage balance.
We are seeing more and more homeowners receive these supposedly helpful loan modifications that place them $200,000-$400,000 underwater in many parts of California. Many of these borrowers have only been homeowners for 1-3 years and the predominant age group seems to be 30-45 year old risk taking males and of course many females with very little skin in the game.
Men and woman who took the risk to invest in real estate and men and woman who are more than willing to take the risk of walking away. To some it’s a business decision and instead of digging themselves deeper in debt and many are just saying, “Take this home and shove it!”
A lot of the people really want to do the right thing and save their homes. That is why they are reaching out to their lenders for help and researching ways to obtain a loan modification. But many consumers are realist and this is really just basic common financial sense when your investment goes south.
As Kenny Anderson once said, “You got to know when to fold’em………….know when to hold’em……know when to walk away…know when to RUN!”
Bottom line America, you can’t polish a mortgage turd and any FDIC or government loan modification plan or offer that doesn’t properly address current real estate market values is a plan made to fail and really, that would be a pretty shitty plan after all!”
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