This is why homeowners are screwed. You can either read this with an open mind or continue to believe in loan modification fairy dust. There are also a few bad words here and there to emphasize the vulgarity of this subject.
It has been three years since I started preaching the loan modification gospel from my blogging pulpit here on LoanSafe.org and over on my other blog, LoanWorkout.org. I have come to the conclusion recently that the vast majority of struggling homeowners who cannot maintain their current mortgage contracts are on the foreclosure creek without a loan modification paddle.
They are simply and 100% unequivocally screwed. There is no other way to put it. I am not going to sugar coat these shitty mortgages any longer. If it tastes like shit, looks like shit, feels like shit and smells like shit, then by golly, it's shit.
I am asking the media, Congress, banks, Obama and anyone else who will listen to please just be honest with the people who are losing their homes. Inform them they are up foreclosure creek without a paddle. So, lets stop the loan mod chit chat. There is no reason to reason to put lipstick on the mortgage pig for any longer.
So why such loan modification doom and gloom from Moe?
Hell, I have researched and blogged about loan mods more than anyone on earth. YES, more than any living soul on planet earth. I have seen and or counseled thousands of homeowners in the last 3 plus years. I guess you can call me somewhat of an expert on this subject. So, I tend to know what is "really" going on out there with people who are attempting to save their homes.
What is really NOT going on are loan modifications. They never have been, nor will they ever be.
So, why aren't banks saving homes and or the government making laws mandating it? Simple, loan modifications do not stimulate the economy. Hence, there is no money in helping people saving their homes. The money is in new home loans, refinances and home buying. Just off one new real estate transaction,hundreds of people will be stimulated. The money trickles to the broker, loan officer, underwriter, processor, agent, lender, title firm, notary, inspector, appraiser, Wall Street, city governments, state governments, Feds and the list can go on and on.
With a loan modification, really only the homeowner who may or may not be able to keep making payments is stimulated.
This is simple real estate economics.
- It is NOT the banks money, but depositors (AKA you and I) taxpayers (AKA TARP) and investors (AKA Wall Street). Hence, what do they have to lose?
- The buying and selling of real estate is 25% of our economy
- Loan Modifications are 0% of our economy or maybe .0000001%
- A loan modification is not good for the economy in general. It is only good for "your" family's economic world
- A loan mod does NOT stimulate the economy even 1% of what one new real estate and mortgage transaction will
- In order to bring homes down to an affordable level for this fresh debt meat, you all who cannot abide by the terms of your mortgage contracts must lose their homes in order for the new meat to buy them. We are not there yet
- Once this starts to happen, jobs come back in because people are buying and selling homes
- It is not personal, it is just American business.
The sooner we all come to terms with this, the better off we will all be. Loan mods are obviously not in the grand plan and never have been. Is this the way I want things to be? NO! But it is what it is and I cannot lie for the sake of making you feel better.
Let's take a look back at the various programs, plans, guidelines, press releases and propaganda over the last three long years to prove my theory here:
From Hope Now we were left a little hopeless so we instituted the Hope Line that really made us frustrated so we switched it to Hope for Homeowners then we realized we had to leave No Homeowners Left Behind so we had to keep them FHA Secure through the FHA Modernization Act via the Emergency Loan Modification ACT of 2007 so we could provide them the Emergency Economic Stabilization Act of 2008 in order to make the Making Home Affordable, but them we realized we had to change course with the Home Affordable Modification Program and finishing it off with a foreclosure bang with the Hardest Hit Fund.
No, I do not wear a tin foil mortgage hat either.....
How many plans and programs do we all need to understand that homeowners are on their own? Personally, I think the sooner we all realize this fact, the sooner we will be on the road to recovery.
Unfortunately, most people will never get this fact or they fail to recognize it because they are waist deep in their own personal great depressions. Homeowners make irrational decisions as they try and bail themselves out of a sinking real estate boat. I don't blame them. I am just trying to assist them as I try to open their eyes to their true realities. Some listen, some don't.
If you are listening to me, you need to understand that the real estate and mortgage markets were never designed for people to stay in their homes for 30 years and pay of their mortgages. They were never designed to offer loan modifications and stop foreclosures. It was designed and managed to perpetuate buying, selling, refinancing and speculation. Real estate and loans are Main Street's Wall Street or legal Vegas.
Unfortunately, if you are underwater and or in foreclosure, then you lost the bet.
You can cry, kick and scream at the banks or government all you want, but it is really just a waste of your energy. That energy would be better spent on improving yourself or life somehow. Maybe you can figure a way to make more income by starting a business or a new career that will fit in our new economy. I am just trying to help you "get" the fact that you may be fighting a losing battle by bailing out a boat that is going down like the Titanic.
Let's stop sugar coating things to make them appear to be sweet deals and programs when they are really BS or should I say rather shitty. The sad truth is saving homeowners is not good nor wise business for our banks or government. Thus, you are all being sacrificed to the foreclosure gods for the greater good of man kind who is waiting on the side lines to take your place.
It's a hard pill to swallow, but gulp.........
Sources:
LoanWorkout.org: FHA Secure
Forbes: Hope Now Alliance announces new guidelines to help troubled borrowers
BusinesWeek: 'Hope Now' Hot Line Frustrates Borrowers Needing Help Now -..
NPR: Federal Program To Help Homeowners Takes Effect : NPR
New York Times: MORTGAGES; FHASecure: How Much Help? - New York Times LoanWorkout.org: FHA Secure Flop. Only 266 Borrowers Have Been Assisted!
Money CNN: Next steps for FHA bills - Dec. 17, 2007
LoanWorkout.org: Emergency Mortgage Loan Modification Act of 2007 | LoanWorkout.org
Wikipedia: Emergency Economic Stabilization Act of 2008 - Wikipedia, the free
LoanWorkout.org: Will Project Lifeline be Another Foreclosure Flop?
Orginla Post: LoanSafe
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