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One of the reasons that I never started up a division to process loan modifications is that although I could easily have made a ton of money, most of them would fail and I knew it. Every once in a while I accept an engagement to help negotiate the modification but the essential problem that everyone is ignoring is that we are not dealing with the creditors AND we are not dealing with an authorized representative of an ACTUAL creditor. So I think that the entire modification scene is a PR stunt and I won’t play.
One of the interesting statistics shows that over half of all homeowners in trouble were not seeking to get out of a legitimate debt. Quite the contrary. They were seeking to make what they knew was invalid, into a valid binding contract with reasonable terms. — Four million of them! So much for deadbeat borrowers.
And if the experience had not been so frustrating with “incomplete applications” and “lost applications” and then turned down because “investor rejected” probably all of the foreclosures would have been worked out except for a few and the economy would not have tanked eliminating jobs for workers whose pension funds had been invested and lost in the mortgage backed securities scheme. In a sense many, if not most working people were foreclosing on themselves!
Practice Suggestion: I wonder whether the worker with pension rights and benefits could demand information on which REMIC Trusts issued what securities to their Pension Fund or the mutual funds in which their 401k was invested.
But instead of good faith efforts to modify, they got lies, deceit, fabrication and fraudulent schemes to tilt the borrower into a foreclosure that didn’t need to happen. And in so doing they killed both the borrower’s equity and the REAL creditor’s equity in the loan, driving down prices with their control of the market just as they had artificially increased the price of homes far above their values during the boom.
Why would the Banks force themselves to lose money by rejecting modifications and forcing foreclosure and depressing market prices? Simple — that is not what happened. They didn’t lose money. They made money. And they suffered no losses from the write down of mortgages that mostly could have been saved. That is what happens when Wall Street gets unfettered discretion to do anything they want without a regulator looking over their shoulder and without law enforcement carting them off to jail.
In the end it doesn’t matter in our bully culture if the investors (pension funds) lost money, it doesn’t matter if 18 million people have been displaced from their homes, their lives and their jobs. What matters to Wall Street is how much money they can make regardless of how they do it and who gets hurt. The Obama administration is still drinking the Cool-aid along with his predecessor in office, Bush. Neither of them had a clue about finance and they still take their advice and information from the same people who screwing everyone.
Filed under: foreclosure | Tagged: LOAN MODIFICATION |