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What Has Really
Caused All Of The Loan Modification And Foreclosure Problems Today?
By William Withagee
1/14/09
Loan modification and foreclosures are unquestionably one of the hottest
subjects in the U.S. today.
Sadly it is a hot topic because so
many people are close to losing their homes and being in
foreclosure and require loan modification help.
What is truly frightening is that if we
are not careful, loan modification and foreclosures could become as big of a
debacle as the subprime mortgages that created the problem
in the first place.
Loan modification and foreclosures are quickly becoming
one of the scariest “wild west” scenarios in the United
States today. Completely unscrupulous and crooked people are
jumping into the loan modification business supposedly to
"stop" foreclosure alongside of
legitimate companies. How can an individual who is on the
brink of losing everything they own and being thrown out of
their homes know who to select to do their loan modification
negotiations to stop foreclosure on their home?
Before we can possibly succeed in truly
helping people to stop foreclosures on their homes and to save their homes and create mortgage
payments that they can afford and weed out the crooks in the
business at the same time, we must first recognize what has
transpired up in loan modification and loan mitigation until now.
It is totally impossible for this
foreclosure problem to correct itself on its own, and unless we
recognize the mistakes of yesteryear we will be doomed to
repeat our errors.
How did we get to such an abysmal
situation in America today with a current record 9,300
foreclosures being filed PER DAY?
First, everyone must face up to their
own faults. Mortgage companies blame the brokers and brokers
blame borrowers and borrowers blame the government for all
of the foreclosures going on today.
Everyone needs to stop blaming everyone
else and shoulder their own responsibility for all of the
foreclosures being filed if
we hope to correct our problems. It is only by recognizing
and accepting our faults and seeking how to correct our
shortcomings can we ever hope to correct our dilemma and
find solutions to loan modifications, loss mitigation and
foreclosure help.
Let’s face it; the mortgage companies
were greedy and flat out stupid for being willing to provide
sloppy and foolish loans in the last five years to just
about anyone who walked through the door and had a pulse.
They had to know that this would start a rash of
foreclosures.
And don’t even get me started on the Government's
stupidity in the foreclosure mess!
While in an industry as huge as the
mortgage industry there will always be fraud, the mortgage
companies cannot blame the brokers for their own lax
underwriting and processing requirements. They didn’t have
to give the money away; they wanted to give the money away. Again,
they HAD to at least know that the foreclosure potential
existed before they made all of the bad loan creating the
need for loan modification.
Unfortunately not everyone should own a
home. Yes it is the American dream to own your own home, but
maybe Americans should be dreaming of something that they
can afford and not the ‘pie in the sky”. Do we really need
that fourth bedroom and 3rd bath? Do we really
need granite countertops and heated saunas? Do you
really need a foreclosure and to find you and your family on
the street?
I don't think so.
All of these things are nice, but not
necessary, and certainly not always prudent.
Regrettably, the mortgage companies
were virtually forcing money on people (and ultimately
forcing foreclosures!) that had no business
buying more than they needed. And let’s be honest; when
confronted with the cookie jar, who can resist taking more
than we should?
The honest brokers are probably the
least culpable of all. They were just selling products that
were offered to them to sell.
But did the brokers really think that
the individual stating their income at $150,000 per year
while providing virtually no proof that they really made
that money, could really be earning $150,000 at a job that
at best could be paying $50,000? Come on brokers; confess up
to your past sins. Hiding your heads in the sand makes
you no less responsible when your client's all lose their
homes to foreclosure. Remember, not everyone will be bailed
out by loan modifications and other foreclosure stop help.
The real estate brokers contributed to
the problem by “puffing up” values and convincing buyers and
seller alike that there was “no bubble” and real estate
values will go up forever. Maybe they should convince
themselves that there is no foreclosure "bubble" either.
I personally saw condo developments
where the real estate brokers were buying 8 to 10 units
themselves to artificially inflate the values. I also
recently saw one of these real estate brokers who is now
desperately trying to lease, sell or otherwise give away 18
of these units. Whatever happened to that “infinite growth
bubble” they so eagerly preached?
Real estate brokers need to remember
these hard times and promise, “ I will never, never inflate
a property value again.”
Don’t get too comfortable Mr. and Mrs.
Consumer; you’re not off of the hook. Tell me, did you
really think that your 2% interest only mortgage would last
forever? Did you really think that you could afford that
$500,000 home on a $50,000 per year salary? Didn't you
realize that if you cannot make your payments the only
result will be foreclosure?
Do you really believe that elephants
can fly? Only in the movies my
friends…only in the movies.
Mr. and Mrs. Consumer you need to do
some real soul searching. Even if you are successful in your
loan modification and you can stop foreclosure on your home, should you really be living in
the home that you are in, or should you take the reprieve
that your loan modification is offering and sell your home
as soon as possible and move into something that you can
really afford? The next round may leave you without any
possibility of loan modification or foreclosure help.
Even if you are in the right home and
the new loan modification or other stop foreclosures methods makes your budget livable, what
other expenses should you be paring down?
Do you have a year
of income stored up if you lose your job or health
temporarily? Remember, I said a year not a few weeks. Do you
really need that new car, or will that four year old car
that you are driving be good for four or more years?
Finally, we come to the Government. Ah
the Government…what shall I possibly say with out writing an
epistle that is longer than “War and Peace”?
After standing by for years watching
Fannie May and Freddie Mac, in my opinion, two walking
foreclosure factories, go bankrupt providing bad loans
to people that should not have them, what does the
Government do? They give the already irresponsible mortgage
and banking industry 700 / 900 (who really knows) BILLION
dollars with no strings attached, no requirements for
reporting how the money is spent and no restrictions on the
use of the funds.
Wow, that really sounds responsible!
PLEASE!
If you are going to throw away my
money, and my children’s children’s money, at least can you
step in and provide some legislation to protect the consumer
from the crooks proliferating the loan modification and fake
stop foreclosure help business
today? Can you at least make the banking and mortgage
industry give an accounting of how they are spending our
money?
Can you at least use some of the common
sense that you are saying that the mortgage companies,
brokers and consumers have not been showing? Oh well,
hopefully President Elect Obama will truly change the
currently desperate foreclosure problems. I
for one am not holding my breath.
In closing, I think that we need to
remember the old truism, “If something seems too good to be
true, it probably isn’t.”
Mortgage companies, brokers, consumers,
Government; confess your sins and change from your foolish
ways! Everyone, stop relying on getting bailed out by loan
modifications and stop foreclosure help programs!
Next: What Is A Loan Modification
Stop Foreclosure Help Program
And Who Qualifies For A Loan Modification Hardship?”
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