Foreclosure Resolution Blog

For quite some time, there have been complaints that the reason why so many homeowners have defaulted, and foreclosure levels are so high, is because “they don’t have enough skin in the game.” The theory is that homeowners who have put little-to-nothing down on their home purchase are more likely to default than those who’ve contributed a substantial down payment, because they have less to lose if their home goes to foreclosure. By extension, it is believed that those with larger down payments will exert more effort to avoid foreclosure and keep their homes.

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I don’t often comment on topics like this, but I just saw Shepard Fairey on the “Colbert Report,” and learned that he was the artist who created the iconic Obama Hope poster.

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If you weren’t already aware of the power of the U.S. Government as an investor, CITI has agreed to support bankruptcy cramdowns to help homeowners avoid foreclosure.

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When you read articles about how to avoid foreclosure, you’ll often hear some genius from a non-profit saying something brilliant like, “We tell them- you’ve gotta get rid of the cable!” Nevermind that cable is probably one of the cheapest forms of entertainment.

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JP Morgan Chase announced a new loan modification plan a little over a week ago. With every new press release, a wave of homeowners flood the phone lines, inquiring about the terms of the new program, and wondering if it will help them to avoid foreclosure. Let’s take a closer look.

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In June, I outlined one of the main reasons why lenders do not want to offer a loan modification to borrowers in default. That was just one of the many reasons why it’s been difficult for borrowers to avoid foreclosure. (If you’re looking for the long list, that can be found in “How to Avoid Foreclosure and Stay Out of Foreclosure.”

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Just when you thought that Congress was the only legislative body screwing things up, there’s news that New Jersey legislators are moving forward on a new bill to “encourage” lenders to avoid foreclosure. The New Jersey Home Ownership Preservation Act would tax lenders $2,000 for every foreclosure.

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As I mentioned in my previous post on the proposed RTC plan to avoid foreclosure crisis, there is already a long list of players who want to buy distressed mortgage assets. So I wondered whether the federal government would end up paying more for these assets than the well-capitalized “vulture” funds.

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The latest thinking on what to do with all the bad paper resulting from the foreclosure crisis is to create a new version of the RTC. This entity would buy the under-performing loans from current investors. Democrats want to ensure that this new entity will be more flexible in dealing with homeowners who want to avoid foreclosure.

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One thing that I’ve noticed about homeowners who are trying to avoid foreclosure is that they commonly have a long denial phase. And the deeper they get into the foreclosure process, the more likely they are to slip back into that denial. They often make very poor decisions along the way, all in the name of maintaining the (previous) status quo, and trying to avoid foreclosure.

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