Comments on: Loan Modifications Stalling the Foreclosure Recovery Effort?

By: JOHN

JOHN — Sun, 07 Jun 2009 06:58:48 +0000

The banks seem to have consumers going around in circles for months faxing and sending the same information so many times that in the end the consumer runs out of money and losses their home. They should have let these banks go under and start with new employees that would understand finances instead of the greedy with non finance/accounting degrees.
I don’t see things getting better in California. Every day in my area their is two or three new homes that go empty and become vandalized.

By: Kaylee

Kaylee — Wed, 27 May 2009 05:02:23 +0000

exactly…all of you are right…im sure there are a lot of homes still out there with only days left before there foreclosed on…Banks have got to come to the realization principle reduction and interest rate reduction is the only way…what they have been doing thus far is not working…commonsense tells you the type of reductions listed above will…if banks would even consider revamping the orginal note with a 5 year lower payment, then the remaining years adjusted as needed…it would give the homeowner time to get their affairs in order…hopefully this will result in less foreclosures…

By: John

John — Sun, 19 Apr 2009 00:28:43 +0000

You are correct! The banks need to take their lumps like the rest of us, suck it up, and start dropping principal. They will lose that money anyway taking the property through foreclosure. This way, they are actually being somewhat human by helping the taxpayers who already funded their ‘bailout’. They should drop principle to current value, change rates to allow the loans to service, then the market will start to recover.

By: Moe Bedard

Moe Bedard — Fri, 17 Apr 2009 13:15:40 +0000

Sean,

My thoughts are the only way to stem the tide of foreclosures is to offer principle reductions.I really do not see principle reductions happening anytime soon, but will be more common at the end of 2009-2010. That will be the ONLY way to keep millions of homeowners from fleeing their underwater homes.

Keep up the good work!

Marecela, you hit the nail right on the head!

By: Sean OToole

Sean OToole — Thu, 16 Apr 2009 23:38:23 +0000

Hi Moe,

Thanks for the mention. I really don’t think we’ll see loan mods make a significant difference in the foreclosure numbers until we see mods with substantial principal balance reductions. The banks seem to believe that prices will return once the “foreclosure crisis” is over, and that payment only mods will carry them through until then. This fails to grasp the reality that prices never should have reached the levels they did in 05-07 and would not have if it wasn’t for option ARM’s and other loose loans. Hopefully we’ll all get to this realization sooner than later so that we can start focusing on the real problem in this economy — 20% of US, and 30% of CA households with a mortgage are underwater. Hard to see consumer confidence rising until we clear out the toxic debt on >homeowners< balance sheets.

Thanks again,
Sean

http://www.ForeclosureRadar.com/

By: Marcela Abal

Marcela Abal — Thu, 16 Apr 2009 19:26:34 +0000

I completely agree. Banks are completely capable of making modifications that benefit both themselves and the consumer in the LONG RUN. These mods that do not reduce monthly payment significantly or help people get current without raising it are basically just putting a band-aid on a gaping wound. The same consumer will eventually default on the mod and cause the cycle to begin all over again. So basically, all that the bank is doing is delaying the inevitable. It has me under the impression that banks are only doing this to appease the new program and not to the benefit of the consumer. And in the end, by not benefiting the consumer, all the bank is doing is guaranteeing themselves a bunch of empty, condemned, and foreclosed houses and no one with good credit left to buy them.