Homes “underwater” numbers growing.

It was reported yesterday in the Dallas Morning News that more than 20% of the homes going into foreclosure are underwater, they owe more than the house is worth. There is a rising tide of this kind of scenario, it seems. Homeowners in this situation are more likely to search a way out of the situation through foreclosure, short sale or modification, if given the options. You can expect the foreclosure numbers to continue to rise over the next year or longer. There are millions of people struggling with their mortgage and this situation is made even worse by the fact that the banks are not answering questions with any consistency. Take for instance this scenario of one of my clients.
They began to have problems a year and a half ago. They fell behind more than 90 days; they were in contact with the banks throughout the process and never got any consistent answers to simple questions. What is the process? How long will it take? Who is handling my file? Why must I repeatedly resubmit the same documents? Skipping forward they got into the modification program and paid the modified amount for almost a year waiting to hear about their permanent plan. On May 8th they received a letter from their bank (Bank of America) that they had been accepted into the permanent modification program and should make the modified payment on May 1st. Huh? When they called the Bank for clarification none of this information was in the system so the bank official could tell my clients nothing about their modification. The matter gets worse when you read that the Bank had added $33,000 of additional payments onto the back end of the mortgage to cover taxes, insurances and third party payments. None of this was explained, nor did the bank official have any information in his system to explain the extra amount. The forms were clear, pay this amount in a timely fashion (negative 8 days from when they received the notice) or be out of the program they had worked hard to be in for more than a year and one half.
So where it sits today, almost a month later is that the bank has never documented the extra $33,000 of extras they tacked on to a document that had to be signed and returned immediately. There has been no call from the person assigned to be the point person between the bank and the homeowner. In fact, that bank person has never responded to any email or phone call over the year and possibly 20 requests for information.
What I don’t get is how the banks can act with such lack of professionalism and be in complete disarray as they are. We are aware that this perfect economic storm is devastating families and yet the banks are making record profits. Where is the business thinking on this? Where are the HUD documents for these modified loans? How can the banks tack on any number they want without letting the person signing for these amounts know exactly what the costs are? Why do banks say they have someone to help answer your questions and that person never respond to the calls or emails? The next several years for millions of Americans will be difficult as they find new ways to survive. There will be a lot of foreclosed homes that will drive down the prices in our neighborhoods. Banks are doing a horrible job of communicating and following through. This is my opinion based on watching their stumbling and bumbling through this whole debacle.