You know how sometimes you’ll hear a song or a catch phrase so often, you think you’ll scream? Like, "Where’s the Beef" or, more recently, any song by Lady Gaga? (Don’t worry — I’m not really sure who she is, either.) These days, my personal version of this phenomenon has got to be some variant on, "I thought the mortgage companies didn’t want to foreclose on homes! I don’t understand why they won’t just modify my loan."
So, lenders, consider this an open note to you. Allow me to give you a piece of my mind — excuse me, your borrowers’ minds.
They’re exhausted. They’ve been beaten senseless by the market and nearly three years of media reports that the real estate sky — and their homes values — are falling. They either have negative equity (i.e., owe more than their home is worth) or they think they do. However, the vast majority of them would really, really like to keep their homes. They live there! And they’re comfortable there. But they need your help, mostly in the area of making their monthly payments more affordable. I’m not sure if you’ve read the news lately, but credit-card payments are escalating, income gaps are proliferating and medical coverage is disappearing — an unyielding mortgage payment on an upside-down home can be the straw that broke the proverbial camel’s back.
While half of the mortgages in the United States are insured by Fannie Mae and Freddie Mac, the other half aren’t, so they don’t qualify for Making Home Affordable programs — they need you to help, without governmental sticks and carrots.
Loan modification seems like the only ray of hope. But then the homeowner calls you and can’t get anyone on the phone. They’re taking breaks from busy work days at jobs they can barely hold on to, or spending their off days on the phone with your loss mitigation staff, only to get conflicting messages as to whether your company even does modifications — "we only got pages 1-20 of your 40-page fax, but we don’t take applications by mail" or worse, "please re-send your bank account statements and tax returns — I know you’ve sent them four times before, Ms. Smith, but they are not in your file and we need them to move forward."
Your staff blows them off unless and until they go late on their payments, but once they are late, they become increasingly detached to the home and decreasingly motivated to run your modification gauntlet. They are misinformed about how to even be successful at getting a modification directly from you, so they either do it themselves and spin their finances to show a monthly deficit, thinking the hardship will spark your mercy (when you’re actually looking for a surplus that shows they can make the modified monthly payment), or they take the plunge into the sea of loan-mod consultants for hire, so someone else can sit on the phone with you all day, with alternately fabulous or horrific results.
And, let me tell you what they tell me, when your loss mitigation department has their application for eight weeks before turning around and saying the modification was rejected because the homeowner didn’t answer one particular phone call and the mitigation folks "don’t leave voicemail." They say, "I love this house, but if the bank refuses to help me, I’ll just walk away." They’re thinking, "I’d really like to stay here, but after this modification drama, I don’t think I could go through a short sale." And, as they pack their boxes and look around at what they are already (unbeknownst to you) thinking of as their former home, they think — for better or for worse — "now this toxic asset of mine can be the bank’s problem — they structured this crazy loan in the first place!"
And they’re saying it so often that in my quiet moments, what runs through my head is not those inescapable lyrics of the latest Beyonce hook, but a chorus of homebuyers protesting in unison: "I thought the bank didn’t want my house back!"
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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