Calling for a Recall on Mortgages-There's an Idea!

By
Real Estate Agent with Keller Williams CA.BRE# 01395219

I was just reading an article in the Orange County Register about the shadow foreclosure inventory and it may not be a surprise but in Orange County there is an estimated 13 months of inventory not on the market. 

So as everybody wonders why the banks hold on to them, waiting for solutions a thought came to my mind.

Let me know if you agree.....

A mortgage is a product - Correct?

If a bad product is sold to consumers, the manufacturer of the product is held accountable by various consumer protection agencies. Correct?

And if it is a massive problem, those companies are expected to fix the problem, i.e. a Recall.  Correct?

 

So with this in mind, why are mortgage companies not being held accountable to fix the current problem with distressed homes. They created a bad product which has devastated millions of consumers and yet the consumer is paying the price.  There is no real fix for the consumer.  We here/read time and time again who is benefiting from the problem that they created.  Can you say, One West Bank.

 

 

Speaking with a client today they have a applied for a loan modification various times and they have been rejected as their income has been substantially impacted.  They have reached out to non-profit agencies, wrote letters to Congress and even the President asking for solutions.  Yet all they get are no answers.  They have suggested solutions, asked for a time commitment in order to improve their financial situation.  Yet no answers come.  So they wait.... and wait and wait. (yes, of course they are trying to improve their financial status, they are working as many hours as possible, rented out rooms and considered renting out the house, but how can they when each time they talk to some one they are told, call back we have no answers, or they are being qualified on different terms)

In the back of their mind, they have given up and know they are going to have to find a new place to live.  A decision has to be made as their home was scheduled to go to auction last month.

Earlier in the week, they called their lender to see if there were any options and told sorry, your home is scheduled to go to auction next month.  Whether it will, we won't know until that day comes.  So once again they think, we must continue to pack up and find a new home. So off we go to look at rentals.

Yesterday out of the blue, a package is delivered to their door and SURPRISE!!!, it is a modification agreement from Chase.  They think, Woo Hoo,  our home is saved!  

Slow down, it is a 3 month temporary modification.  Some may say be thankful, which they are, but realize once again there really is no answers here for them to move forward with.  As it notes, at the end of the program we will come up with a new plan that may increase your payments.  OK, great and we agree but to what they ask.....

So do they move forward or sit still and pray something will change financially so they can keep their home!

Looking back if the lender had worked with them a year ago, they could have received this monthly modification payment each month and given the consumer enough time to make a decision and improve their situation, i.e.. rent the home out, etc.  But how can they when each time they call, ask they get "sorry we have no answers for you call us back in 10 days."  10 days later, 10 days later, 10 days later.

So this new modification does it really give them any hope, is their a solution somewhere in the fine print? I think we all no the answer to that question.

Now we understand why there is 13 months of shadow inventory? 

How about coming to the consumer and saying, OK we get it you are in trouble, we agree we created this problem and will meet you half way.   ( I know I live in a fantasy world)

First we will modify your loan for ahhh, say a year.  We agree to reduce your principle, right off the second by this much.... as we realize we are going to loose 200k now.  (not set it aside, write it off, reduce principle)

Your income must increase by this much....

Your debt must decrease by this much.....

We don't care how or if you rent out the home, these are the terms you must meet.  If you do then this amount will be your new loan amount.

If you don't agree with these terms, then you have these options, short sale, deed in lieu, and this is the time frame we will give you to complete these task.

YAY, the homeowner is thrilled, why because they can actually make a decision on their life today and move forward vs. feeling like a hostage.

 

 

Posted by

 


Kelly's positive spirit, sound business and marketing skills, and experience negotiating multimillion dollar contracts all combine to make her one of the premier real estate professional in the communities of Portola Hills, Foothill Ranch, Lake Forest, Trabuco Canyon and throughout the Saddleback Valley.

 

 She takes a big-picture approach to make sure all of your goals, both short and long-term, are part of a larger plan that's guiding you towards success. Call Kelly to schedule a free consultation on how she can help you achieve your objectives. Whatever your Real Estate Dream is, with Kelly Turbeville at your side, It's Possible!

 

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The above information is provied for informational purposes only and is deemed reliable but not guarenteed. Based on information from California Regional Multiple Listing Service, Inc. as of [date the AOR/MLS data was obtained] and /or other sources. All property data, including all measurements and calculations of area, is obtained from various sources and has not been, and will not be, verified by broker or MLS. All information should be independently reviewed and verified for accuracy. Properties may or may not be listed by the office/agent presenting the information

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Tags:
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mortgage
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Rainmaker
215,790
Wayne and Lynda Gomillion
Real Living Hagan Realtors | Pinehurst ~ Southern Pines, NC - Pinehurst, NC

Kelly, Makes sense to us... Thanks for the post!

Feb 20, 2010 06:01 AM #1
Rainer
22,792
none none
none - Yucaipa, CA

Because the goverment is running things. If they let to many go at once the prices of homes will go down.

Feb 20, 2010 06:04 AM #2
Rainmaker
138,411
Kelly Turbeville
Keller Williams - Lake Forest, CA
Turning Real Estate Dreams into Reality

Thanks Bot and Wayne and Lynda for reading my blog.

Bob, home prices have already gone down and will continue because nothing is moving forward and the banks will buy up these properties and make huge profits.  Just look at OneWest.

Agreed the gov't is not looking out for the consumer, in my blog the only one loosing will be the banks and should be held accountable for selling a bad product.   Let's look at Toyota.

Feb 20, 2010 06:10 AM #3
Anonymous
Cathy

This is soo true, my sister moved out of her home so she could find a rental before the foreclosure as her lender told her she did not qualify for a mod.  Six months later she moved back in as their home did not sell at auction.  Each week they talked to their lender to find the same answer which is no answer. They did receive a temp. modification package which was a surprise that was totally misleading.   Paying a quarter of their payment, then a month in a new agreement an increase to cover escrow expenses and then 4 months later told they do not qualify.

Your question of a recall is an excellent idea, but that probably is not in the gov't best interest.

Feb 20, 2010 05:19 PM #4
Anonymous
Jim

Just spoke to a friend who's Temp Mod was up in Aug. Eight months later they have heard nothing from their lender.  They continue to make the reduced payments but have no idea when the hammer will fall.  Is this a modification agreement, forbearance or just a way for the lender to get some dollars from the consumer and avoid the cost of the foreclosure.

Feb 23, 2010 01:54 PM #5
Rainmaker
138,411
Kelly Turbeville
Keller Williams - Lake Forest, CA
Turning Real Estate Dreams into Reality

Thanks Cathy and Jim

I hear your frustrations, I just wish I had answers for your family. 

Hang in there!

 

Feb 23, 2010 02:10 PM #6
Rainmaker
1,116,416
Jim Frimmer
HomeSmart Realty West - San Diego, CA
Realtor & CDPE, Mission Valley specialist

But if they had issued a massive recall, the public would have lost confidence in the banks, just like it has lost confidence in Toyota. LOL

Mar 01, 2010 05:27 PM #7
Rainmaker
138,411
Kelly Turbeville
Keller Williams - Lake Forest, CA
Turning Real Estate Dreams into Reality

Thanks Jim - Don't ya think the consumer has lost all confidence in banks these days.  Yes, but we all still let them control our money......

Mar 09, 2010 11:38 AM #8
Anonymous
Cathy

Just read you posted this in Feb, amazing with todays news that the lenders are holding off on foreclosures as there may be some "incomplete paperwork" ya think - this pretty much sums it up.

"In short, we may be looking at the next big wave of class action law suits against major financial institutions"

Or maybe this will help the banks push for more foreclsoures since they typically make $.36 on the dollar for foreclosures and $.55 on the dollar for short sales.  How about working with the homeowner and turning a non-performing asset into a performing one.

Oct 05, 2010 03:28 PM #9
Rainmaker
138,411
Kelly Turbeville
Keller Williams - Lake Forest, CA
Turning Real Estate Dreams into Reality

Thanks Cathy

I appreciate you taking the time to comment.  I do believe the recent foreclosure halts and lawsuits will help push Lenders to do what is right.  When is the question.  The more I read the facts about lenders knew this was coming, insured against it, did not do the proper papework and are intentionally not modifying loans, the angrier I get.  I just hope it happens sooner then later.

 

Oct 06, 2010 05:22 AM #10
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Rainmaker
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Kelly Turbeville

Turning Real Estate Dreams into Reality
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