Flash… Lenders DON’T want to modify!

As as Seattle real estate agent who specializes in short sales and negotiating with your bank I am coming to conclusions about the Home Ownership Made Affordable Program (HAMP) effort to help millions of American homeowners in getting their home mortgages modified.  Sadly the numbers are all too revealing.  Another reason why Seattle short sales will increase, over the coming years, as distressed home owners receive more foreclosure notices, it’s simply a smarter choice!

The numbers… the guise of the rubric of everyone wanting to “Help the Homeowners Keep their Homes”, “Save Our Neighborhoods”, “The Banks Care About Their Clients”, “Banks Give a S&*%”.

The numbers show what is happening … The program has enrolled over 850,000 homeowners who are seriously delinquent in their mortgage payments in a trial modification period but has encountered significant problems in converting those trials into permanent loan modifications.

From my experience what I see is that the Government has created a program to help distressed homeowners and banks have adopted a public personal of wanting to work with homeowners under the guidelines of the Government program.  After all, the banks want to resolve the problem also!  But then you get the numbers… The numbers don’t lie.

My next blog will deal with the duplicity of banks in their efforts to abide by the HAMP guidelines while preying upon the lack of understanding of the typical distressed homeowner (who is a lot like a deer in the headlights). An example of a homeowner will show how they have been preyed upon. Come on back!

“The Treasury Department reported Friday that 66,500 of the 902,620 homeowners who had started the trial modification period for its Home Affordable Mortgage Program (HAMP) had completed the three month trial and entered into a permanent modification by the end of December.  Another 46,000 have satisfactorily completed the trial and have been given final documents but have not yet signed and returned them.

Although only a 7.4% conversion rate, this is more than double the 32,400 signed permanent modifications reported at the end of November.”

Seattle / Tacoma and the Greater Puget Sound Area get ready for possible changes mortgage changes

Mortgage write down are being discussed more seriously. This means that if you are upside down on your mortgage, as many Seattle home owners are  and have tried the modification route to no avail there might still be on last gasp effort available to you.  Reduction in mortgage principal is looming on the horizon.  (don’t miss the video below)

The real tragedy is for those of you who have actually lost their homes through bank intransigence during the mortgage modification process.  The good news is that reform of ill conceived programs may be upon us, the bad news is that the horse has been out of the barn for a three years.

A summary of these major events affecting Seattle home owners follows:

1. Fannie Mae and Freddie Mac are on a path of destruction. Many are calling for the GSE’s to be abolished!  Well, abolished is certainly a strong word.  But changes are in the offing.
2. NOW, the GSE’s are providing 75% of all new mortgages.  Which simply means that they have been the dumping ground for banks.  Somebody had to be, how about you and I!
3. There are three proposed options: Nationalization of the GSEs (that’s right you would now own them), Improved GSE structure or turn them over to the private sector (been there, done that).
4. Combined with FHA Fannie and Freddie ARE the mortgage market. Private banks are not lending…no GSE’s….no mortgages.
5. This is astounding…112 BILLION that has been spent..that will never be paid back…and they are expecting another 112 BILLION in upcoming losses! (anyone out there still think we are near bottom?)
6. Principal mortgage writedowns are gaining momentum…10% off all mortgages 25% upside down…and 25% of all mortgages 10% upside down. In the US roughly HALF of all homes are owned…no mortgage. Of the other half…35% are now upside down.
7. Let’s face it.  Something needs to be done.  Housing has been a government priority, just poorly implemented.  The end of government subsidies (with the privatization of FNMA/ Freddie) meant that homeowners would have to compete with corporate America for funds.  This meant that the game was afoot, greed could prevail and bring on the current calamity.

One Seattle Short Sale specialist opinion, everybody has one.

This is the first of a series of blogs which deal with the duplicity and greed of many of America’s largest banks and brokerage houses.  I have followed the finance industry as a mortgage banker and Seattle to Tacoma and Bellevue WA real estate agent for over 30 years.  As a Seattle short sale specialist I have a unique understanding of the way that banks work, how to negotiate short sales with them and how to help families facing foreclosure, helping homeowners avoid foreclosure and limit the damage to their credit.

These blogs, in particular, are to help develop a mindset.  BTW… not a wacko here, just like to think how about you?

It just keeps going on, much like peeling open an artichoke in order to get to the heart of the matter.  At least in an artichoke you know that there is a heart.  In our banking industry it appears there is also a heart at the center, a cold stone heart.

Banks and brokerage firms bonuses loom big in the sights of the governments efforts to ameliorate the public ire at the situation that we all find ourselves in.

Recently I heard that the Europeans were considering taxing the banks to the tune of 50% of the bonuses that the banks pay themselves.  Like in the U.S., there is the threat that the banks would leave a jurisdiction which would attempt to restrict their compensation in any way.  You hear it all the time “Banks fear an exodus of talent if compensation levels are interfered with”.  I have always wondered “Where else would they go in order to earn such bonuses?”

Here is an interesting thought on the above.  Where could the banks go the top executives?  The banks could take their business to foreign countries, as many other American companies have done over the years, where they could continue to operate with minimum oversight and maximum greed.  How would that affect us who remain behind?

The actual reason that banks will continue operating in the U.S. will be for their own self interest.  They could move lock, stock and barrel to some safe haven, but who would be there to bail them out when their irrational exuberance brings on the next big bubble to threaten their existence?  Who would give them the billions needed for their survival then?  It would be shear insanity for the banks to hightail it out of Dodge.

I guess that we are stuck with them.  By the way there is a very interesting book out there titled “The Creature from Jeakyl Island” which deals with the formation of the Federal Reserve (video here).  The book is a real tome and requires a bit of perseverance, but it does makes you think.

Contact us today for a free Short Sale consultation.