A very important consideration when you’re trying to prevent foreclosure is your loan-to-value ratio. This is the measure of what you owe on the home, versus what it’s worth.
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Three Columbia professors recently issued a proposal to prevent foreclosures through loan modifications. Their idea: pay the servicers an incentive to do them.
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The solution du jour floating around in Congress is a proposed provision to allow mortgage cram-downs on personal residences through bankruptcy to stop foreclosure. Senator Dick Durbin has once again rolled out this proposed legislation. As usual, Democrats think it’s a stellar idea, while Republicans are outraged at the thought.There is a tremendous amount of confusion as to how this would work in practice. However, my goal here is not to write a treatise on bankruptcy cram-downs to stop foreclosure. Rather, I want to focus on how effective they would be in helping homeowners to stop foreclosure.
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The U.S. Department of Housing and Urban Development will shut down the FHA Secure Refinance program at the end of this year. The program, which was supposed to help 240,000 sub-prime borrowers to refinance into fixed rate FHA loans, fell just a little short of its foreclosure prevention goal.
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For all the talk of “we want to keep people in homes” and “we’re expanding the American Dream,” for all the big talk of the bozos in Congress who provide “oversight” of the GSE’s, numbers recently reported indicate that Fannie Mae is doing FEWER loan modifications, according to Housing Wire.
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Shortly after the OCC announced dismal results on loan modifications, Ocwen released its own results, claiming that only 24.6 of the homeowners who were granted a loan modification were 60 days late within 6 months.
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John Dugan, head of the Office of Comptroller of the Currency (OCC) recently delivered a speech outlining a “new” set of metrics they’ve been tracking on homeowners who obtain a loan modification to prevent foreclosure. While the big news in the popular press is, “How many loan modifications took place this month?” and while most politicians keep poking lenders in the ribs to do more of them, the question is, just how effective are loan modifications in preventing foreclosure?
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Has the loss mitigation industry failed the homeowner who’s trying to prevent foreclosure? There was an excellent article in the Wall Street Journal on a related topic: Some Consumers Say Wall Street Failed Them. It talks about how the burden of risk and responsibility has been shifted to the consumer, while Wall Street manages to make (take) money at every turn.
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As a person who specializes in helping homeowners to get a loan modification and prevent foreclosure, I have the good fortune of providing a service that offers REAL value to my clients. My goal has always been to leave my clients much better off as a result of working with me than they were before they found me. And while there’s plenty to complain about when it often seems like you’re trying to prevent foreclosure in spite of EVERYONE involved (including the clients themselves in some cases), there are a lot of things for which I’m grateful.
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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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