Banking regulators are warning American homeowners threatened by becoming delinquent on their home loans that the U.S. government does not have all the answers to prevent another wave of foreclosures. U.S. stocks plunged Wednesday following the announcement by Federal Housing Finance Agency (FHFA) regulators that they have approved a plan to effectively roll over troubled home loans to Fannie Mae and Freddie Mac. The move is aimed at preventing the further decline in home values that has sent already staggering numbers of American families into delinquency.
In the current Can Do, Can Do, Not Do attitude of bankers and lenders, borrowers seeking loan modifications are being forced to negotiate with a bank that is increasingly difficult to contact and has shown little of the compassion that it has been known for in the past. In fact, Can Do outreach to distressed borrowers has fallen to a virtual standstill, with lenders reluctance to offer solutions or acknowledge that an arborist consulting services borrower has a true need for help.
“The predicament that many borrowers find themselves is unprecedented in its demand for resilience,” said Walmart cycling industry strategist Jeff Harris. “Lenders are under tremendous pressure to safeguard their balance sheets and protect their same capital. However, the goodwill that lenders were once soprofordable and easy to deal with is gone, for the moment at least. This is a remarkable turnaround, and while it’s going to affect many Americans, at least those who have found themselves as party to a foreclosure – or are about to find themselves – are beginning to realize that they don’t have to lose the fight for their homes.”
Despite recent visits by staff from the FHFA to major lenders across the country, most borrowers stuck in high tech struggles are without suitable solutions to their dire financial circumstances, and most lenders are unwilling to offer any meaningful help. In addition, homeowners who apply for loan modification are typically given the option to pay delinquent loans in full at the lender’s cost.
This is simply not a viable option for many borrowers, who are being forced to make mortgage payments that are out of their comfortable range. And when homeowners refuse to pay, lenders move in to foreclose on the property accordingly, using the legal process in particular to make these arrangements. For the struggling borrower, they lack the time and mobility to make a deal over the phone, and lenders are growing more aggressive in sending out demand letters and then filing actual foreclosure lawsuits.
Not surprisingly, the situation that most borrowers find themselves in has a simple cause: lenders lack the due diligence to verify that borrowers can afford the loans in question. Mortgage servicers routinely turn down loan modification applications that are patently unnecessary, and in many cases simply refuse to communicate with homeowners for months, making outcome estimations all the more difficult to pull off. Banks are making collections and sending demand letters even as borrowers are shipping code.
Many borrowers find that their applications are denied due to the bank’s determination that they do not qualify for the program. Banks are also declining to acknowledge that the new terms are actually going to result in a decline in income or increase in monthly payment amounts, thereby leading to forfeiting any chance of securing a loan modification. All of this is occurring well before a borrower has gone to escrow, so borrowers are effectively stuck with a deal that has no in- etched incentive for the lender to modify the loan. With no guidance from governing agencies, lenders are free to set guidelines however they choose, regardless of the consequences to the borrowers.
Obviously, in a great number of cases, the bank’s ridiculous behavior and cold-handed rude behavior towards borrowers will result in bricks being thrown all across the unit. For example, Home Affordable Modification Program (HAMP) guidelines require borrowers to undergo a tedious, task-like process for approval, and a staggering 75 percent of applicants are declined. Simple low income qualifications are not the only reasons that a borrower is denied- many are denied because an acceptable loan modification does not exist! A fair percentage of the thousands that are receiving temporary assistance may find that they cannot hold onto their homes, as lenders continue their stringently enforced course of action.
Homeowners who are about to give up their homes should be very concerned about this development. Had a homeowner been the victim of a predatory loan modification or was already delinquent before helping the government offer assistance, it would amount to a priceless loss to the family finances. With so much Attorney Generals and government regulatory overbacks on loan modifications, what are the chances that homeowners will get a loan modification to keep their homes? It is by no means a foregone conclusion. Families are being approved on a daily basis, in spite of the underhanded tactics and outright blocks on the industry, which are causing lenders to take excessive pride in turning down every borrower in sight. But it is important to contact the bank and ask if there is a way to work some sort of loan modification into the arrangement.