Nevada Loan Modifications - Why They Fail

Real Estate Agent with Simply Vegas Real Estate

Las Vegas, Nevada - We have all witnessed the Occupy Wall Street demonstrations taking place in New York, and major cities throughout the country. Protesters are pointing their finger at major banking institutions, blaming them for the collapse of our housing market and economy; however, are American banks the source of the real problem?

Let’s face it, banks are an easy target. The days of trusting your neighborhood banker are long gone. It would seem that banks are going out of their way to make life difficult for American homeowners. Millions have applied for mortgage modifications and been denied. Government loan assistance such as HAMP, HAFA, Hope Now, and the Making Homes Affordable Programs have been complete disasters. Thousands of homeowners are being foreclosed upon each day, and people are angry. While it seems logical to blame the banks, the fact remains that the reason banks are not modifying mortgages for homeowners can be blamed directly on the federal government.

Most people do not realize that the bank they obtained their mortgage from, does not typically own their loan. It is ultimately the decision of the investor whether or not to approve a loan modification. Just for clarification, your loan servicer is the financial institution that collects your monthly mortgage payments and has responsibility for the management and accounting of your loan. (Servicers include banks such as Bank of America, Wells Fargo, Citigroup, Chase, ASC, Litton, GMAC, Greentree, etc.) The majority of residential mortgages are owned by groups of investors (i.e. Fannie Mae, Freddy Mac, Ginnie Mae, etc.) and these investors hire loan servicers (banks) to interact with the homeowners on their behalf.

The Federal National Mortgage Association (Fannie Mae) is the nation’s largest mortgage buyer (investor) and a financial institution that affects the lives of tens of millions of homeowners. It was taken over by the federal government on Sept. 8, 2008, along with Freddie Mac, as the two mortgage giants struggled with deep losses and investors lost confidence in the pair. According to Bloomberg Business and Financial News, Fannie Mae and Freddy Mac control more than 71 percent of residential mortgages. Between Fannie Mae (FNMA), Freddy Mac (FHMLC), and Ginnie Mae (GNMA), the government controlled company that issues and insures loans by the Federal Housing Administration, our government controls nearly 97 percent of U.S. mortgages.

Since bank investors must ultimately approve a loan modification, and since 97 percent of U.S. mortgages are controlled by the government, then shouldn’t the federal government be held accountable for the tsunami of foreclosures and the failure of loan modification programs? Banks simply cannot approve a loan modification without permission from the investor of the loan, and 97 percent of U.S home loans are controlled by the government.

This presents several interesting questions. Why aren’t the Wall Street Protesters demonstrating in front of the Federal Reserve, or the White House? Additionally, why is our government rewarding the people responsible for the collapse of the housing market?

According to Politico, The Obama administration’s efforts to fix the housing crisis may have failed to help millions of distressed homeowners, but our leaders in Washington have allowed seven-figure bonuses to reward top executives at troubled mortgage giants Fannie Mae and Freddie Mac.

The Federal Housing Finance Agency, the government regulator for Fannie and Freddie, recently approved $12.79 million in bonus pay after 10 executives from the two government-sponsored corporations last year met modest performance targets tied to modifying mortgages in jeopardy of foreclosure.

The executives got the bonuses about two years after the federally backed mortgage giants received nearly $170 billion in taxpayer bailouts. This was allowed despite pledges by FHFA, the office responsible for keeping them solvent, that it would adjust the level of CEO-level pay after critics slammed huge compensation packages paid out to former Fannie Mae CEO Franklin Raines and others.

Demonstrators around the country protest corporate greed, however, why don’t protesters hold our leaders in Washington accountable since our federal government is directly responsible for financially rewarding the people who caused the crisis?

With hundreds of billions in taxpayer dollars required to keep Fannie Mae and Freddy Mac running, questions are arising about the nature of the pay packages and how performance goals are determined. Bill Myers, co-owner of The Myers Team with the Caliber Realty Group asks, “Why does our government continue to throw homeowners out on the street, yet pay $12.79 million in bonuses to the people responsible for the housing crisis?” Myers is currently ranked the number one short sale Real Estate agent in Nevada.

Myers Team owners, Bill and Francoise Myers have helped hundreds of Las Vegas families avoid foreclosure. Myers said, “Sellers facing foreclosure must remember that banks are not looking out for you or your family. When you work with The Myers Team, our job is to get between you and the bank. We represent our clients, NOT the banks. It is our job to negotiate the best possible outcome. Ultimately, our job is to take away the stress, and make the transaction as smooth and stress-free as possible.”

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