The banks can say what they want but the reality is they are not doing much to help troubled homeowners. The servicers and negotiators will kill short sales or drag them out so long the buyers move on to other properties. They will deny a short sale and site the reason as not wanting to pay for title or escrow. Really? They expect a first time buyer to buy a home in California without escrow? I have yet to hear of anyone who has had the balance of their loan reduced but have heard numerous stories of the banks offering loan modifications that actually cost the homeowner more. The government knows this and what is there solution? They want to offer financial incentives to the banks to modify the loans. Great, let's reward the banks with more money for not doing what they were supposed to do. Mr James may deny this is happening and say that investor relations and customer relationships are what is important. I say actions speak louder than words and the actions of lenders show that what is important to banks is the all mighty dollar and their bottom line.
Daily Real Estate News | July 30, 2009 | Share
Even as government officials are pressuring mortgage companies to expedite their efforts to renegotiate home loans for troubled borrowers, industry insiders are scoffing.
They say the delays mostly can be attributed to the reluctance of mortgage companies and servicers to give up revenue from late payments, including on insurance, appraisals, title searches, and legal services.
''It frustrates me when I see the government looking to the servicer for the solution, because it will never, ever happen,'' said Margery Golant, a Florida lawyer who defends homeowners against foreclosure and who is a former employee of Ocwen Financial. ''I don't think they're motivated to do modifications at all. They keep hitting the loan all the way through for junk fees. It's a license to do whatever they want.''
Even the government recognizes the problem. ''The rules by which servicers are reimbursed for expenses may provide a perverse incentive to foreclose rather than modify,'' concluded a recent paper published by the Federal Reserve Bank of Boston.
Bank of America disputes that characterization vociferously. ''To think that somehow or other we would jeopardize investor relationships and customer relationships for the very small incremental income we would receive by delaying seems ludicrous,'' said Robert V. James, the bank's senior vice president for mortgage operations and insurance. ''It's not the right thing to do.''
Source: The New York Times, Peter S. Goodman (07/30/2009)
2 comments:
Every investment has risks and drawbacks. The important thing is to recognize them, to be aware of what can happen to your investments, and to make sure you aren't exposed to risks you can't afford.
Interesting!
The loan modification process can be frustrating and confusing for many distressed homeowners. But you have to know what exactly is loan modification. A loan modification is a permanent change in one or more terms of a borrower's home loan.
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