Fox Business reports the White House is considering additional laws to force lenders to act ethically on foreclosures and loan modifications.
MORTGAGE, EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY
Michigan Loan Modifications may be getting easier and saner in the near future.
Fox Business broke a story over the weekend, based on a leaked document, that the White House may again get tougher on banks & lenders to force them to not only approve more Michigan Loan Modifications (and across the country), but to also do so more ethically.
Imagine that – after getting bailed out with TARP funds and being chastised for still paying out obscene bonuses, Wall Street bankers aren’t playing fair when it comes to loan modifications and foreclosing on the taxpayers that funded their bailouts.
Oh, by the way, for the free market capitalists out there who still insist that the federal government should just let foreclosures happen – practice what you preach. Let’s turn back the clock and let all the banks that received TARP funds fail – then you can sit in your ivory towers and chastise down and out homeowners.
Here’s a breakdown of the proposal leaked out:
1. Home loan servicing companies would be forced to offer Michigan Loan Modifications to delinquent borrowers before resorting to foreclosures.
2. Bankers, lenders and servicing companies would all be prevented from foreclosing on borrowers being solicited for, responding, working on and during the loan modification process.
3. Lenders would have to attempt to contact delinquent homeowners at least 4 times by phone and mail them two notices about the program, at least once by certified mail, within a 31 day period.
4. Create a new 30 day “borrower response period” for homeowners turned down for a loan modification, during which the lender couldn’t complete a foreclosure.
5. Require servicers to document in writing that a homeowner doesn’t qualify for a loan modification before proceeding with a foreclosure.
Why the need for the additional guidelines?
Foreclosures in 2009 were up 21% from 2008 to a record 2.8 million. They’re expected to increase another 20%+ in 2010 to over 3 million.
When the Obama administration announced its “Making Home Affordable Program” in February of 2009, its stated goal was to help 3-4 million homeowners get modified loans.
So far, only 116,000 homeowners have gotten permanent loan modifications, obviously another failure for the Obama administration.
The new rules though, are another step in the right direction to help homeowners get Michigan Loan Modifications.
Currently, if your loan isn’t being serviced by a federally chartered bank, your lender doesn’t have to offer you a loan modification in accordance with federal guidelines. Who are these servicers that don’t have to follow the rules? Here’s some from the federal government’s own monthly report on loan modifications:
- American Home Mortgage Servicing
- Aurora Loan Servicing
- Bayview Loan Servicing
- Carrington Mortgage Services, LLC
- Green Tree Servicing
- HomeEq Servicing
- Litton Loan Servicing
- Ocwen Financial Corporation, Inc.
- Saxon Mortgage Services, Inc
- Select Portfolio Servicing
There are many horror stories from those trying for a Michigan Loan Modification of how they followed all the rules and thought they were working on a loan modification with one of these servicers – only to suddenly get a notice of Sheriff Sale. Many got the Sheriff Sale notice before they got a letter rejecting them for the loan modification.
The cries from these abused homeowners must have risen to high enough numbers to finally reach the White House and force them to do something about it.
The part of the plan concerning forcing lenders to document that a homeowner doesn’t qualify for a loan modification will be the toughest to enforce.
Who will be charged with policing this? The banks themselves?
That hasn’t worked so far. If you go to the government’s “Making Home Affordable” website, it tells homeowners,
“This site can help you determine if you are eligible, but only the servicer of your loan can tell you if you qualify.”
It also says,
“Beware of Foreclosure Rescue Scams – Help Is Free!”
The biggest foreclosure rescue scam is the government telling homeowners to call their loan servicers for “free” help. If that was really working, and loan servicers were actually acting ethically – these proposed rules wouldn’t be needed.
If you’re considering applying for a loan modification, give me a call for a free 15 minute consultation. If you decide I’m credible, we’ll discuss a retainer fee for expert assistance.