The investigative news report at the end of this post by Brian Ross, Chief Investigative Correspondent for ABC News, chronicles the experiences of elderly homeowners faced with the peril of losing their homes.
In their attempts to stave off the threat of foreclosure, each homeowner makes earnest attempts to reach the appropriate staff within their lending institution to arrange a modification of their existing mortgage. Even with aid of Congresswoman Maxine Waters, very little was accomplished.
Lenders, overwhelmed with requests by homeowners for loan modifications, are prioritizing new loan business over defaulted mortgages. In addition, many lenders have laid off staff in their loan processing/mortgage underwriting departments given the low profit margin environment that exist for new Home Mortgage Creation/Placement.
Banks are not structured to provide the intense financial counseling needed for homeowners in default on their mortgage. In addition, with most mortgages packaged into securitized debt (Mortgage Backed Securities) Banks also don’t have the up front risk associated with holding all mortgage loans created on their bank balance sheet (thanks to Banking reform after the Savings and Loans crisis back in the 1980’s)
While the proposed legislation seeks to establish a Consumer Protection Agency for financial products and services offered to John/Jane Q. Public, it arrives too late to address the current foreclosure crisis.
Brooklyn holds the distinction of having 5 of its neighborhoods in the top ten throughout New York City experiencing high mortgage defaults (see The Foreclosure Business: NYC $59 Million Plan), and if trends continue it will change the Social, Economic and Demographic realities in these communities.
All consumers facing foreclosure, who followed the rules and complied with the terms and conditions of their mortgages prior to either a reset of their interest rate or loss of income due to being laid off, should begin think out of the box and employ legal strategies to remain in their home.
The Consumer Warning Network has been sounding the clarion call to the general public to begin using all legal measures available to stay in their homes.
One of the current strategies proposed is “Produce the Note“. You can read more about this and other techniques and strategies that may apply to you or someone you know whose facing foreclosure, particularly our elderly citizens.
Since the U.S. Treasury implemented a series of programs designed to encourage lenders and mortgage servicers to offer Loan Modifications in 2007, there have only been approximately 30,000 homeowners nationwide who have received Loan Modifications of their existing mortgages.
As of June 2009, there have been 1.9 million NEW foreclosure filings by lenders.
Watch for growth in a new market practitioner that will specialize in assisting homeowners in New York City with Loss Mitigation. Their training and experience may prove more valuable for consumers than the services currently offered by not for profit Housing Counseling providers.
Meanwhile, view this short broadcast to see what homeowners around the country are experiencing.
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