I had this dream last night. It was Halloween and a Trick or Treator came up and rang my doorbell. I opened the door and a 10 year old boy was standing there dressed in a suit and tie and said "I'm from the Federal Government and I'm here to help". I slam the door shut and go screaming for cover in great fear! It was such a nightmare...
We are in uncharted times in our industry. We are all looking for solutions starting with our own little niches in the world up to the grand scheme of things in the country overall. We would like to think that our leaders in government have some clue about what paths to take to help wind us through the maze of issues we face. But then, of course, they are one of the biggest reasons we are here in the first place.
Because business has been slow and because I have a driving need to eat I, like many of you, have looked to other avenues of income to help get through this trying time. I have worked in my career in non-profit housing and home owner counseling/education for both pre-purchase and default, on a local and national level. So I am currently doing contract work in foreclosure/loss mitigation for a HUD approved/Hope Alliance non-profit that I previously worked with. I have kept very up to date on what options are available to people in this position not only for their assistance but for my knowledge as a Mortgage Banker.
While I do think that much of what the government does is with good intentions the truth is that most of it just does not work, is not well thought out, and makes better publicity than being effective. One of the reasons for this is that the people making these decisions are not based in the reality of the situation. They are not at the "grass roots" level and dont't see the picture clearly. So while it makes a nice headline it doesn't often offer the solution to the problem, or in some cases, makes the problem worse.
One example; The Hope for Homeowners program. This is the loan program they are putting out that began on October 1st which will allow a person that is in default to refinance on an FHA loan. The customer has to be behind, own only one home, have no second mortgage (or have the second lien holder agree to write off their balance), and does have to qualify under certain debt ratio guidelines. The lender has to agree to have a new appraisal done and then accept a new loan at 90% (really 87% because their is a 3% charge) of that value, writing off whatever the difference is. The new loan has a significantly higher rate than the going market and higher overall closing costs and MIP. That is a very basic overview. One of the keys to this is that it is TOTALLY up to the individual lender whether they want to do this or not. In essence it is a "suggestion".
How many do you think have taken advantage of this wonderful program that is going to help solve the foreclosure issues? Don't you think that when it rolled out the first of October that people and lenders would have already been lined up to close these out and solve problem? So what if it wasn't the greatest deal for the lender, and even in a lot of cases for the borrower given that interest rates have bounced around like the stock market and are currently on a high range? Surely this wonderful government solution (which does not cost the government any part of the $700 billion, in fact nearly nothing of that amount is actually going to assist the foreclosure situation in any way) will have eveyone scrambling to take part and get this situation resolved.
While I have fielded numerous questions about it from people in distress I have to tell them in nearly every case that either a) their lender is not participating or b) due to the fact they have a second, they have little or no income, etc. that they don't qualify. Fox News did a report on this program several days ago. Since the first of October when the program started (and their was much publication, etc. about it that generated a lot of interest) 79 people NATIONALLY have been able to take advantage of this. No, that's not a typo, not 79,000, not 7900, not 790....79.
I'm from the Federal Government and I'm here to help........very scary.