Loan Modifications: Is There More To The Story Than Meets The Eye?

I just read a featured post asking why loan modifications are failing. Let's see if there is more to the picture- 

I also wrote a featured post about this some time ago. It is here: Is Your Short Sale or Loan Modification Being Turned Down?
That post was reblogged 44 times and had 4437 views. It was one of the most read posts I have ever written. 

The reasons are very clear if you research the facts. The servicers are under their PAS agreements which I explain in detail in the previous post that I noted above and they are always in fear of being sued by the note owners; the investors.

Just because the servicer is a bank does not mean that bank is the one that holds the note.
 
One of the biggest misconceptions in dealing with loan modifications and short sales is that when the homeowner calls ‘his bank’; over 90% of the time, he is calling the loan servicer.

Just because the name of the servicer may be the name of a bank, like Bank of America or JP Morgan Chase- does not mean they own the note on your mortgage. There are many times where you will find that your loan is being serviced by Bank of America but your note is owned by Wells Fargo.

So the first thing we have to get straight is that there are different things in the works here. Let’s not mix the apples with the oranges.

The different segments to discuss are:

• The servicers who service the loans
• The investors who own those notes
• The banks desire/plans to control our economy
  

Just because the big banks are horrid and lack in customer service like you’ve never seen before does not mean that they are not doing loan modifications for the reasons most think. There is a lot that the servicers can do upfront to help the loan mods to move along that is not rocket science. I will write a post about the fastest way to get a yes or let's process answer and we can hope they implement these. 

Now before we jump all over the banks- which we have every right to- because they are totally ruining our financial system not just in our country but in the world. We have every right to be mad at the banks.

Thomas Jefferson, over 200 years ago warned us about allowing banks to control us and our governments:

";I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people        ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and  corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up  homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to  the people, to whom it properly belongs.";
Thomas Jefferson, (Attributed)
3rd president of US (1743 - 1826)


But when the servicing agreements tell the servicers they MUST protect their investments and ROI- they become fearful of law suits.

There was a bill in the house that was addressing this issue to relieve this liability off of the servicers and to give them some leeway in to what they could get sued over and what not. But the investors who need to protect their investments lobbied the house not to pass this bill. I am not sure if it ever even got to the floor of the house.

Now there are always more kinks in a situation than we might realize or expect. So the answers are not so cut and dry either. Don't get the banks tightening up lending, the banks not investing, the banks not being prepared, etc, etc, with why servicers are reluctant to do loan modifications and short sales. These are different subjects, all with merit but not for this particular discussion.

You see, many of these investors who are not excited about loan modifications and short sales are not the banks but the investors of those banks. So many people and companies ended up owning knowingly and unknowingly toxic mortgage backed securities. One of our investors on one short sale file is Etrade.

Who are these investors? People like the teachers in your children’s school, the local firemen and women, the police chief in your town, the sheriff in your village. People like your grandparents and aunts and uncles who are living on pensions right now. People like you if you have an IRA account or a 401K retirement account. These are the shareholders and the actual owners of these toxic mortgage backed securities.

So when the servicer is fearful of falling out of the guidelines set forth in their PAS agreement- their fiduciary duty is not to you and I who pay our mortgage payments to them but rather the you and I who have our retirement plans, pensions and stock investments tied up in the notes that were bundled and we bought.

Feel Free To Reblog. 

 

 

   

 

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Loan Modifications: Is There More To The Story Than Meets The Eye? was first published on South- Florida-Luxury-Living.com.

Copyright © 2009 By Katerina Gasset, All Rights Reserved.*Loan Modifications: Is There More To The Story Than Meets The Eye? *