I used to think bankers were some of the sharpest people in the financial industry... now I know differently - it just took a "Great Recession" to open my eyes.
Since this financial crisis hit, I've worked all sides of the equation - I've represented seller's in distress, buyers looking for the great deal on a foreclosure or a short sale, investors that do nothing but bottom fish AND bank REO's. Yes, lovely, wonderful banks. I used to think, like most agents that "buyers were liars, but sellers are worse..." - not so anymore. That's all child's play compared to dealing with a bank.
Imagine a bank, with a customer upside down. They owe more than they can sell for, their income has been cut in half from loss of work and they say to the bank "modify my loan to X% for two years so I can afford to stay in this home and then I'll go back to paying what I was paying before" - that way the owner gets to stay in their home, the bank has one less foreclosure to deal with and while they are not receiving the full APR they had originally agreed to, they are at least participating in the loss on a small scale, which prevents foreclosure and losses on a much grander scale - not to mention the family gets to keep their home and maintain hope for some recovery during the rebound effect, sure to come (it already has started, in some zip codes!)
BUT NO! The bank says we won't do that, why should we? We'd rather take a $200,000 loss AND drag you through the muck, wreck your credit and in the end, get an empty, trashed (because, hey, what incentive do they have to leave it nice?) home back they then have to pay taxes and insurance on as well as the ROI losses every single day it sits empty. But at least they ruined another life and threw a family out on the street - so it's a good day, for the bank anyway.
I have a friend who is a loan officer and he gave me the inside skinny on his bank's mentality - in order to get something, you must give up something. That's it. That's why people who are not late or behind on their payments, can never really negotiate any sort of modification with their bank. Because the bank says "you must first agree to wreck your credit before we will even speak to you" - that's the equivalent of saying "wreck your ship on the shore, then call the Coast Guard for help" - I guess that works, but was it really necessary? Apparently, for banks, it is.
That is a sad commentary on our society, is it not? And I blame all of this on air conditioning! Because since we quit sitting on our porches and/or speaking to the driver next to us at the stop light until it turned green, we have become social incompetents. It's just that simple. Think about it - really, this IS the problem.
The solution? Banks, all across America, should have to turn off their AC and deal with the real world, at least for a day - then, maybe, just maybe, they would come to their senses. I know that if I was a bank, I'd proactively work with anyone in trouble, toward a "win-win" solution that benefits us both. But they just don't see it that way - in their air conditioned ivory towers, do they?
All I'm saying is... "where is the humanity"?