How to Keep More People in Their Homes and Avoid Foreclosure

A very small percentage of mortgage loans are held by (and in control of) the banks that originally made them and/or service them.  Individual loans have been packaged and sold to investors around the world as small pieces of large investment portfolios.  It's my understanding that the servicing companies have no authority to renegotiate loans - they just collect payments and late fees, disburse taxes and insurance, and oversee the foreclosure process.  They don't have the authority to renegotiate one loan that is a teeny part of a big package of "paper" owned by somebody else.  THAT is why they're not able to help individual borrowers.  Maybe that is a change that will come out of all this, but it won't help anyone with a loan written under the old rules.

No banks want want to lose more money now.  No person in the bank wants to put their job on the line to make the decision

I wish this would come true, it would help so many and give our market time to come back so these homes would sell. They could agree to keep them on the market for an offer to come in as well.  You know in Michigan MSHDA anouced the save the dream program for homeowners in trouble to re-fi to lower interest rates so people could save their home, but the guide lines are so strict, that many do not get approved for the loan.........lip service I guess!

 Interesting thought...if you have dealt with any short sales you know that corporate lending America is ill equipped without some outside intervention to deal with anything on what may resemble a timely basis. How I wish Bill Gates would put his philanthropic retirements efforts here....

Good thoughts. Maybe with a little tweaking this would work for a few years. My only concern is that it just postpones the inevitable.

Sounds kind of good and it is easy to talk about how some big banks should handle thier money. 

But is it something that you personally would do if you were personally holding a few of these mortgages?  Say you were using that interest to send your kids to college.  Would you put your kids' schooling on hold while you gave your mortgagor a year to catch up?

I don't have the stats, but I would assume that many of these people who are in trouble got into these homes little or no downpayment.  They bet on home prices to continue to appreciate.  They lost their bet and now need to deal with it and move on. 

I have always felt that the faster you confront a problem and deal with it, the better everyone is.  Trying to stay in a home that is just too expensive for you is just going to delay everyone's pain.  Bite the bullet and take your loss and find a less expensive home to buy or rent.

Life really sucks sometimes but that's what makes the good times feel so good.

The lenders could not get the quality people they would need to do this. They have little incentive to do this.

The people involved may be better off leaving and getting into something less expensive. They may need to attend math classes as well.

Richard~It sure is great to know there are still "optimists" in this world! Your ideas are very positive and would work in an ideal world, but as many have said before me, there are so many other factors at play (such as investors who bought packaged loan portfolios) that I don't see them willing to work with Sellers at any faster pace than they have been these last 12-18 months. I will say, though, that the growing foreclosure market is a serious black eye for our country. We have hundreds of thousands of people who are in or will face foreclosure and a economic climate that suggests something needs to be done before we are in a full-blown recession. Thanks again for the positive comments. It's nice to read those on a Saturday morning vs. all the other bad stuff the media is promoting.

http://www.vlender.com/e/experience/pdf/phase1.pdf

This is a document that goes over the steps in the process for a resolution.    Each case is different and may require a different approach.  We look for long term solutions for all parties in a bad transaction.  We have thousands of files and have provided thousands of solutions for homeowners.  We do think out of the box and work with lenders across the country.  Many lenders now send their clients to us to help them maintain home ownership.  No one involved wants the home back or to displace a family that has had a hardship.  There is no charge for a consultation and we only take cases that we have fully analyzed and determine we CAN help.  It is tough times for many in todays economy and foreclosure is not the only answer.  Thanks for your post and make it a great day.

Richard, If everyone on Active Rain sent this to their lenders, maybe we would see a bit of a change.

I am going to bring up your post on the radio show tomorrow. All About Real Estate www.wcbm.com 410-922-6680- Sunday 12 noon - 1 pm

Would you like to call in?

I come across many homeowners that when given the opportunity, they would still let the home go to foreclosure - it's the easy way out and they save on monthly costs for 6-9 months.

One of the many problems that the seller's face who purchased their home in the last 2 years in addition to selling their home is paying for the commission to the realtor.  In today's market it is difficult to sell at an inflated price. 

Richard your idea may work well with sellers who have equity only. Good blog! 

It seems like a tough situation for the lender to either lose money on a monthly basis, vs. foreclose lose thousands if not hundreds of thousands of dollars as an REO sale but get the bad loan off the books. 

Richard,  Wonderful ideas and great comments ... 

My two cents, as REALTORS we are a part of the problem....  Many REALTORS didn't hesitate to sell those homes at the high end of what our "clients" could afford - talking to "creative financing" and "sub-prime" lenders to help our clients obtain loans that were not mainstream.  We NOW need to help our clients make it through this difficult financial crisis.

WE need to stop throwing our owner/clients under the bus, stop preying on the backs of those in financial hardship... WE CAN HELP!

As REALTORS, we can assist our clients with the short sale process - we can negotiate with the banks who don't want the house back... it is much less expensive to them to participate in a short sale, before the foreclosure.  Additionally, in a Short Sale, the BANKS pay the commission as part of the negotiations - The idea is to sell the home at the highest marketable price.  We need to rethink our strategies to help clients, not walk-away because we don't understand how the system works andhave as our first concern our commission checks.  Those will follow successful transactions, negotiated by those who care to be a part of the solution, not just pooh-pooh the system or close our eyes and wait for housing crisis to resolve itself.

If a short sale is the solution, it can be a WIN-WIN for all parties involved.  Also, remember that helping a client re-negotiate their loan with their lender is the right thing to do, if that is also a possible solution - even if you don't get paid. 

Richard,

Your suggestions make a lot of sense. It appears that lenders would lose less money in many cases if they just worked out something mutually suitable with the homeowners. Yet, it seems to be too much to ask.

This is a great approach that could work for some people Richard. The hard sell is if it is good for the lenders. They are not used to thinking this way.

Richard, Enjoyed speaking with you today. Here is your invitation for Sunday's show.

Active Rain - Live Radio Show - Sunday !

We just got a client into a lease on Saturday. She tried since January to work with the bank and not lose her home. She had an 80/20 and the ARM went up, her husband was laid off.

Do you think the bank would help?

NO

Finally, they told her, if you pay us 106,00. then we will talk about it.

She finally told them well if you want my house that bad, you can have it.

I do not deal with leases, they are too time consuming, but I felt so sorry for her that I did.

Richard is live on the radio right now!!

I listened in on the radio show.  You did a great job!