Have You Had Enough Loan Modification Yet? I am LM’d out.

By
Home Builder with CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments 521400, 1501015, 01795582

Have You Had Enough Loan Modification Yet? I am LM’d out.

 

HAVE YOU HAD ENOUGH LOAN MODIFICATION?  Well, I don’t know about you but I am LM’d out.I have never spent so much time researching and writing about a subject about which I have absolutely no interest.  I’m sure by now we’re all Loan Modification "experts" anyway so alas and thank the heavens here’s my third and final Loan Modification post.

This post will discuss the future of the once budding loan modification industry who's future is definitely in question. While there are no doubt some legitimate LM companies and attorneys in the midst of hundreds of thousands if not millions of Loan Modifications Nationwide the big question still remains…… how long will the recycled “MODIFIED” loans remain current?

According to statistics released by www.loanworkout.org, about half of all modified mortgages fall back into arrears within six months.  There is also disagreement over whether mortgage modifications are effective in minimizing losses for investors.http://loanworkout.org/2009/02/loan-modification-lawsuits-looming-in-the-near-future/This is primarily because the loans should never have been made in the first place and the LTV’s are so upside down that it will take years for the loan to ever pencil thereby dramatically reducing the incentive and desire for the homeowner to keep the home.

Additionally, as many as 3 out of 10 borrowers had no business ever purchasing a home in the first place and were more or less just stuffed into a deal by a greedy and could care less lender. Many of these borrowers never had the desire or financial wherewithal to honor the loan agreement in the first place. They just leveraged and re-leveraged their mortgage thereby exhausting their home equity like an ATM machine in order to purchase all the toys they had always dreamed of. Hence this whole debacle has resulted in one of the most artificially inflated economic growth spurts in American history.

When Or Will We See Mortgage Principal Write Downs aka "Cram Down"?  After spending the past few years studying the subject, it is my personal opinion that the final solution will rest in the governments hands.  As much as I hate to say it and as much as I’m against all the government intervention and literal takeover of the “American Free Enterprise System” I feel the only way this mess will ever sort itself out is when the FED mandates a principle and interest write down across the board.

Is The Investor The Elephant In The Room.  Most importantly, however, many folks fail to realize that all these lenders no matter how big or how small have one thing in common…..“INVESTORS”.   Therein lies a very significant problem.

The main reason principal and even interest LM’s are not being done in the volumes that all these LM companies and RE attorneys and scams had hoped they would is because the INVESTORS that all these lenders are beholding to are not budging.  In fact, they’re threatening major law suits against the lenders if they even think about messing with the principle.

That’s why it will eventually have to be mandated by “BIG BROTHER” at some point. So in conclusion I will simply state that the entire LM concept is in question and should be held to great scrutiny by RE practitioners as a whole. 

If the subject comes up with your clients, which it surely has and will continue to do, good advice would be to simply tell them to seek legal council from an experienced RE Attorney or try to solicit help from the myriad so called FREE government sponsored LM programs currently in place.   Frankly, I wouldn’t even recommend referring anyone directly.  It may just come back and bite you right in the shiny hiney someday. So be very careful.

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John DL Arendsen, Broker, General & Manufactured Home Contractor and Dealer 

TAG Real Estate Sales & Investments

TAG (The Arendsen Group) Real Estate Sales & Investments is a full service, one-stop, turnkey, family owned and operated real estate brokerage, General Contractor, Manufactured Home Contractor, Developer, Investor, Property Manager, Interior Design, Engineering, architectural, Landscape design, Expert Witness, Consulting, Curative Title and Troubleshooting company with over 100 years of combined experience in the San Diego real estate sales, construction, design & development arena.

 

 

 

 

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Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

John, I agree with you that is is cumbersome and it is on its way out.

Feb 05, 2013 05:45 AM #1
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John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & Contractor

Debbie, I missed my opportunity with your contest. These three posts would have been perfect but I didn't even think about them until a related post hit a nerve. Oh well, I'll be there for your next contest.

Feb 10, 2013 11:02 AM #2
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