The Loan Modification attempts by many of my short sales listing clients can be summarized with two simple words. . A JOKE
The article below begins to show the slippery slope my clients unknowingly got involved with.
Its a loan modification. . not a loan mortification!
The Loan Modification Seesaw
Remember the seesaw on the playground? It was always a surprise to me when my playmate on the other side decided suddenly to jump off without warning. That’s what it’s like for many homeowners during the loan modification “review” process.
One day they’re out and told they do not qualify for a loan modification. The next day they’re in, and told their paperwork is “under review.” “Under review”, especially if it comes on the heels of “you don’t qualify”, usually means the loan servicer is stalling before they jump off the seesaw and foreclose.
I’ve heard this same story from several of my clients and other homeowners who lost their homes to foreclosure. It’s the recurring, nightmare loan modification story of their attempts to work out a loan modification with their loan servicer, Bank of America.
Bank of America reached a settlement of $8.5 billion (that’s billion, not million) to pay investors that lost money on mortgage-backed securities on Countrywide’s bundling (and re-bundling) of risky residential first liens. Bank of America inherited a mess from Countrywide when they bought out CW in August 2007.
According to WSJ, it may have been the worst acquisition in banking history, but will this settlement help homeowners now who are in default of their mortgage loan serviced by Bank of America?
The theme of NY Times article, “Bank’s Deal Means More Will Lose Their Homes,” says what I’ve concluded these last several months. Loan servicers, especially Bank of America, do not want to modify mortgage loans. Lenders are not in the business of loan modifications. Homeowners, who are in default, will be most likely on the fast track to foreclosure.
The article also points out that part of the settlement requires Bank of America to send out many of their loans to other, smaller loan servicing companies. If default is imminent for those homeowners, they may be one of the lucky borrowers, because they may now have a fighting chance at a loan modification through their new servicer. Time will tell later this year.
I’ll keep my hopes up that loan modifications will become a real solution to our housing recovery. However, the end of the NY Times article describes from a Bank of America customer what I’ve heard over and over from several different homeowners in Temecula Valley California about their loan modification attempts with Bank of America.
Just as I learned which of my playmates would choose to jump off the seesaw without warning, my advice is to plan for the landing.
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All information deemed reliable, but not guaranteed. Copyright © 2009-2011 by Pamela Seley, REALTOR®