Almost 5 months ago, Mr. President Obama announced the program to rescue homeowners who are facing foreclosure. The program sounds good to all like more loan modification, refinance and lender to work more on short sales if the homeowner cannot afford the payments, but in reality it’s not helping much homeowner as we thought.
If you look at loan modification, how many people are getting a good payment plan where homeowners can afford easily for another couple of years? If you call the lender for help, some of the customer representatives don’t even care to listen to their problem or help with modifying the loan or not even transfer to the right department so that the homeowner can get help. Many homeowners are complaining that they have to fax the paperwork at least 3-4 times and still the lender says that they didn’t receive the paperwork. The homeowners are trying their best to keep the home.
Personally I know two families who are trying loan modification for the past 4-5 months, they have submitted all the required documents but they haven’t received any answers from the lenders but they are getting harassing calls from the lender’s collection department for the monthly payments. It seems like the lenders are not interested in loan modification.
In California, where I live, haven’t seen a single homeowner who received the refinancing under Obama’s plan because most of them do not qualify that plan. One of the refinancing requirement is loan holder needs to be Fannie Mae or Freddie Mac and another is loan amount not more than 125% of market value of the property. In California, most of the loans are not under Fannie or Freddie Mac and most of the house value has gone down that much that they won’t qualify for the refinancing, so they either try for loan mod or short sale. I guess, we need much better selection criteria for this plan in order to qualify for refinancing so that homeowners can take advantage of this program.
The lenders are getting additional money to close short sale properties, still some lenders are worse when it comes to short sale; they also demand more money from sellers who even cannot afford their monthly payments. It seems like they are more interested in foreclosure than helping homeowners with short sales. The lender knows that foreclosure will cost them another $60,000 but still they let it go to foreclosure. It’s a simple math to check which one is costing more, no wonder some of the lenders are losing more money!! I guess the bank negotiator and customer representative who answers the call needs more training on how to handle this loan modification, short sales and help the homeowners more professionally. Now, don’t get me wrong, some of the lenders are really good in handling short sales and they really want to save homeowners from foreclosure. Short Sale is win-win situation for both the homeowners and lenders.
According to RealtyTrac’s June report, in California itself 474,018 homes received foreclosure notices and unemployment rate is also increased, according to current news, California’s unemployment rate jumped to 6.8% in May, highest in almost 5 years. This is a sign to more foreclosure coming up in the near future.
Obama’s plan to help homeowners from foreclosure is a good start but the Obama’s administration and lenders need to work more on this plan so that they can make this loan modification, refinancing and short sale process much simpler so that these homeowners and the future homeowners can avoid foreclosure within short period of time and without much frustration.
What do you think? Let me know your opinion on how to make this plan better?
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- How Obama’s Plan Will Help Short Sale Homeowner?
- Is Your Loan Modification Company Still Exists?
- New Foreclosure Alternative Program for Homeowners – (HAFA)
