Are you hoping that your mortgage company will “work with you” and modify your loan? Good luck.
On August 12, there was a Free Foreclosure Prevention Workshop at Gillette Stadium. I have heard a number of different perspectives from people who attended. The one thing I am consistently hearing: mortgages are not getting modified, at least in not any meaningful way to enable people to keep their home.
I then read this interesting news release from Massachusetts Attorney General Martha Coakley outlining her recent testimony to the US House Financial Services Committee confirming what I am already hearing:
The Attorney General’s written testimony outlines the office’s findings with regard to the implementation of loan modifications in Massachusetts. Specifically, the testimony notes that:
-Loan modifications are not being achieved in significant numbers. When compared to the number of foreclosures in process, far too few borrowers are able to restructure their loans to generate a sustainable loan; and
-When so-called loan modifications do occur, they often do not result in a sustainable loan. Lenders and servicers routinely offer and complete so-called loan modifications that increase monthly payments and increase overall debt. They do not meaningfully avoid foreclosure. At best, they temporarily delay the inevitable delinquency and eventual foreclosure.
You can read the entire release, and get access to Attorney General’s testimony here.
Lessons in Loan Modifications
Suze Orman is growing on me. Sort of. She often has sage advice for consumers, and lately she has been making regular appearances on CNN’s Larry King Live. I cannot say I completely agree with everything she says, but lately, she has been telling it like it is and when it comes to financial news and advice, it’s refreshing to see some honestly on TV. I have her suggest to consumers that if they are having problems with their mortgage, they should contact their lender (i.e., the workout or the loss mitigation department). A client recently told me he did just that, after hearing Orman suggest it sometime last year. He was falling behind on his mortgage, and decided to walk into his local bank to talk to them. It did not go quite the way he planned.
At the time, the client was not residing in Massachusetts, and his lender was a local bank. He sat down with the manager and explained his situation. Instead of extending an accommodation, or working with the client to help him keep his home, the manager basically said this: “sorry, but we have a lot of loans going delinquent and we need to cut our losses, so we’re going to start the foreclosure process now.” And so they did. The bank pretty much put the house into an accelerated foreclosure process.
Yikes.
That’s lesson number one: don’t go telling your lender that you’re having problems paying your mortgage unless you have some reasonable expectation as to what the response will be.
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Tags: American Bankruptcy Institute, Commentary - Legal, Modifications and Workouts, Mortgages and Foreclosures, Suze Orman
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