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Wednesday, July 8, 2009 | 2 a.m.
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The letter begins: “My wife and I are frustrated, as are many people in Las Vegas who are looking at losing their homes.”
“We have gone through two companies,” the husband’s note to the Sun continues, “at a cost of $2,500 each, with no help from the lenders. We are at a loss ... and we can afford this home with some help!”
The complaint is a familiar one. Homeowners say lenders are not doing enough to work out a deal that could lower monthly mortgage payments and help save homes from foreclosure.
The New York Times recently spent two days documenting the efforts of a loan modification company that tries to get loan servicers to rework mortgages for homeowners. The paper profiled employees who spent most of their time on hold with Muzak or getting hung up on.
Experts say the problem is being felt nationwide as the loan-servicing industry struggles to become a housing counseling agency, too.
Lenders have neither the staffing nor the expertise — and possibly not the motivation — to keep up with the demand from home-owners who want their mortgages reworked so they can stay in their homes.
One housing expert compares the new workload for the loan servicers with that in the education system that no longer teaches just math and reading, but also must provide health care, teen counseling and after-school activities.
“It’s a whole retooling of an industry,” said Julia Gordon, a senior policy counsel at the Center for Responsible Lending. “You will not get a servicer who will say, ‘I don’t want to do it.’ ” But in truth, she said, “they don’t want to do it.”
A group of 20 senators, including Senate Majority Leader Harry Reid, recently wrote to Treasury Secretary Timothy Geithner urging him to pressure mortgage companies to work with borrowers to save homes.
In Nevada another 72,000 homes are expected to fall into foreclosure in 2009, according to one report. The senators said 1 million foreclosures nationwide have occurred this year.
For now, here are some steps homeowners can take as they try to refinance or modify their loans.
Know what is available
The Obama administration’s Making Home Affordable program offers two plans for homeowners — mortgage refinancing and mortgage modification.
Both are open only to owner-occupied homes with loans that originated on or before Jan. 1, 2009. The first lien can be no more than $729,750. (Higher limits for multiple-unit properties.)
Loan refinancing is available to those whose loans are owned by Fannie Mae or Freddie Mac, and who owe no more than 125 percent of the home’s value. (Do the math: that means you cannot owe more than 25 percent beyond the current value, say $250,000 on a home whose value has fallen to $200,000.)
Homeowners with second liens require approval of the holder of the second note.
Loan modifications are available to those in what the administration calls imminent risk of foreclosure, or 60 days delinquent on their loans, who are paying more than one-third of their income on the mortgage. Loans are to be written down to 31 percent of the borrower’s income, either by reducing the interest, spreading the terms to 40 years or reducing principal.
For information go to makinghomeaffordable.gov or call 1-888-995-4673 (HOPE).
Find your loan servicer
Banks that participated in the second round of the Wall Street bailout, known as the Troubled Asset Relief Program, are required to participate in the Obama administration’s housing plan. Also various loan servicers have signed contracts to participate in the housing program (they receive a financial incentive, about $1,000 per loan, for participating).
To see if your loan company is on the list, go to financialstability.gov.
Seek an advocate
Housing counselors and legal aid groups can help provide information and, in some cases, work on your behalf. These are typically no-fee organizations. For information go to lawhelp.org.
Consider foreclosure mediation assistance
In Nevada the state Legislature recently passed a law that allows homeowners who receive foreclosure notices after July 1 to enter mediation to settle foreclosure disputes with lenders.
For information go to nevadajudiciary.us/index.php/foreclosure-mediation.html
However, as much as banks, lenders and investors who purchased the bad mortgages say they want to keep families in their homes, the Obama administration’s programs carry no real penalties for lenders who don’t. Some say it’s an improvement on previous efforts crafted by Congress during the Bush administration that were voluntary.
In the few months since the program has been running, estimates are that tens of thousands of homes have been refinanced or modified, and 200,000 offers for loan modifications have been made — though fuller numbers are forthcoming.
Gordon, the housing counsel, suggests homeowners should follow a few rules. Don’t be shy about seeking help, asking questions and getting second opinions.
“Homeowners should really be aggressive in obtaining help and going after their servicer for an affordable loan,” she said.
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"..Lenders have neither the staffing nor the expertise -- and possibly not the motivation..."
Lack of motivation is the key
With motivation you can put people in place and have a set of simple rule to accomplish RE-FIs.
But bank are still looking at max profit/minumum loss when they address every homeowner.
The Government through TARP and tax avoidance laws geared to protect and expanded bank reserves and liquidity has provided a major disincentive for a bank to process a "short sale" or "loan modification".
The new 2008 and 2009 foreclosure laws were complex, hard to implement, clumsy, restrictive, and ultimately provided an indeterminate or worse end situation for the home owner, and are counter to the bank reserves and liquidity goals.
How is it that these banks are all acting and pricing the same way in concert with each other?
Is there collusion?
Banks have no incentive to refinance.
2009, the Fed is loaning money to banks at 0%, with the government owned AIG paying out the foreclosure insurance, with direct bailout money to cover reserve calls, with tax write offs when they buy securities and no taxes after they hold to sell banks are making money on the backs of the down and out mortgage holders.
Banks have no incentive to refinance.
The way to accomplish that is to delay, delay, and delay and blame the homeowner for some bank paperwork SNAFU.
Business Week report in the June 8th issue that JPMorgan Chase bought Washington Mutual for just $1.9 billion and is looking to pocket $29.1 billion over the life of the loans.
LMAO at no more than 125 percent of the home's value; ummmmm, what's the Vegas average? 200-215 percent??
Right on FUTURE, IndyMac pretty much told me to go f__k myself. Either short sell or foreclosure...I decide. Refinance? Up yours, was what I got.
I think there should be a program to reward those homeowners who are paying their mortgage payments on time, regardless of what is happening to their home value.
The banks should immediatly re-value their loan to the current market value. There are some of us who don't live beyond our means and take into consideration that the future could be different and plan accordingly.
some of the homeowners bought over their heads thinking the economy was never going to stop; using credit cards at grocery stores and gas stations damn the torpedoes full speed ahead; developers building non-stop and SELLING every house. remember those good old days?
Foreclose on the deadbeats then re-sell the house at half the price to someone who pays the bill. Bank gets to collect the PMI and gets a buyer who can afford the new payment. Why reward people who lived beyond their means? Why would you expect the bank to help anyone? The Bank is in business to help itself and its stockholders. These people are forgetting the tax write off the bank gets if they have to foreclose not to mention all the homes that have PMI because most of the deadbeats didnt put 20% down to begin with. The money is on the side of foreclosure not restructure and take a hit that cant be written off. If you are waiting around for the bank to step in and say we will forgive all the money you owe above the new value then you will be waiting forever. The banks are busy setting up reclamation departments to go after people they have foreclosed on for the difference in what the home resold for and what was owed. I feel sorry for all these people who put themselves in a very bad deal. No one made you buy a house you could not afford. You gambled big time with your future.
When GM said to the bondholders no money - Obama backed GM over the bondholders and now taxpayers own a debt free company that only cost us $50 billion.
It is all in the hands of Obama.
To the people in the article: YOU SIGNED THE MORTGAGE CONTRACT! It is sad that you are irresponsible and whining for them to cut you a break. Grow up.
Geezelouise is right on the money. Why doesn't our government reward responsible citizens who pay their bills and save some money instead of helping those who bet on the housing market and lost. Want government help? You'll need to have too many children, be illegal or stop paying your mortgage. They'll be there for you. Well I'm sick of paying for everyone else's problems.
Unfortunately, for all these people there is nothing they can do to "win the attention" of their lender. Many of the people that have been helped were offered help by their lenders befor asking for it. Everyone who played is getting what they deserved I guess, but it still saddens me that the bank filth that sucked so many families down will come out ahead, as they always do.
There are only 2 solutions to this problem.
1. Reduce principal: the banks could still make money this way, but I think they fear the dangers of forgiving debt.
2. Do nothing at all and let nature take its corse.
Let nature take its course. That includes letting banks fail, letting GM fail, letting AIG fail, etc. It's completely unfair to let the idiots that caused this mess survive - and thrive.
All the homeowners have been making money over the years with tax savings and now want another bailout to reduce their loan. Instead remove the mortgage tax deduction and tax free gain from selling a home that has artificially creates this real estate bubble. First start is to provide the incentive to stick out long term in the home by taxing anyone for the foreclosed amount of a loan or allow a homeowner to convert to a renter losing all current equity in the home. Disallow 2nd mortgages which help to fuel this problem.
"Foreclose on the deadbeats then re-sell the house at half the price to someone who pays the bill. Bank gets to collect the PMI and gets a buyer who can afford the new payment. "
Sub-prime loans rarely have PMI, boz0. The banks take the increased risk for the increased interest and they will have to eat any loss. See:
http://www.bankrate.com/brm/story_conten...
ynotjohn: I have to agree with not allowing a 2nd mortgage any longer. Without a second most of these people would have not bought such an expensive house in the first place. Some people used a second as the down payment on the first meaning they didnt have to put up any money on the house. Which mean they really dont have any interest in the house anyway. Its all bank owned so they where just renters anyway. And these are the people that want help. Help for what? You never bought a house you just moved paper around and pretended for awhile.
goingbust Your assuming we are talking about sub-prime loans. 72% of the people seeking restructure are not in sub-prime. Besides the bank is going after the difference anyway.
Geezelouise, your reward for paying your bills on time and not living beyond your means is peace of mind and you actually get to keep your house. That itself is rewarding enough. As far as adjusting mortgages to current market value is BS because if the market turns and values increase, would it be fair then to readjust the balance of your loan to the higher values?
LasVegas2009. Kind of a hardliner are we. Well, I agree with you 100%. Time for tough love on the spending junkies. As has been pointed out, most refinances fail so why be an enabler to someone who doesn't learn their lesson. Like the idiots mentioned at the begining of the story. They spent 5 grand on those scam artist companies that take your money and run while promising debt relief. Not once, but twice. They could have used that money for house payments instead of looking for a shortcut to get out of their obligation.
geezelouise. I played by the rules and while all those deadbeats in houses they can't afford acted like life is one big party, I worked the hours and saved. My house is paid for and I have a couple of nickels in the bank. The reward I'm getting for this is next to nothing interst rates so those credit junkie party people can stay in their homes with dirt cheap refinances or having their loans forgiven when they short sale or get tossed out. By law any loan forgivness was to be taxed as income but they have, or are changing, the law so these deadbeats don't have to pay it. Time to stop rewarding bad behavior so these turkeys will finally learn the meaning of resposibility. Our reward should be that we are no longer being played for suckers and paying the bill for their arrogant "kiss my grits" lifestyle.
Why can't the banks just increase the length of the mortgage and adjust the repayments. They still get a huge return on the loan and the repayments are easier on the lender. I know you might die before you pay off,but insurance covers that and at least you don't lose your home. Is that too simplistic?
I like Billy's idea.
I am all for adding missed payments to the end or extending the term. Most these people want to get the loan amount to be less.
It amazes me people complain that banks are taking too long or non-responsive. You owe them pay them or foreclose. Be fair. Why should you demand a new loan amount?
Also I am in CA and I am telling you this nightmare is happening all over. LV may be a leader, but we are all going bust.
I wish the bank would reduce my loan too. What would that lead to? My Volvo depreciated also. How about I pay back less on that as well?
If anyone has had any luck with any of these companies, could you please post it for the ones that cannot find one to work with you. We've almost lost once and just got a second chance that want last long so I need to get something done now, so if anyone knows the right number to call, i am sure a lot of people that hasn't found them would appreciate it but check out http://obamamortgage2009.blogspot.com or obamamortgage2009.blogspot.com
I don't now what some of these folks are smoking. I bought a home in a newer section of Summerlin in mid 2003, and today according to Zillow.com, it's worth 20% less than that buy price. I did nothing "wrong" or "stupid" in the meantime. My 20% down payment paper equity is gone. There are a few other foreclosures sitting empty in my neighborhood, which knocks down the value of my home. The banks have little incentive to work through the foreclosures at a pace that gives me hope of getting my original down payment back for who knows how many years. I didn't "gamble" by buying a home in LV. I had a good job, great credit, etc. But because of mortgage frauds perpetrated by others and the malfeasance of regulators, I get to bear just as much of the brunt of the housing market crash as everyone else, and I'm frozen from moving on to where I might better participate in the economy in another city. The free marketeers among us somehow think this situation is GREAT for the economy as a whole, but you are wrong. Abuses by a deregulated private sector led to this fiasco, and now everyone can see that we all have a stake in not letting it happen again.
I like Geezelouise's plan. Although, if anybody knows of a lender that is willing to remodify loans at the current principal with a fixed rate, please post any suggestions.