Why Now?
After a few months of writing several times a week about foreclosure-related topics, I’ve decided it’s time to rant a little bit and to ask for some help.
You see, unlike most of the so-called bloggers and forums our there today, this one is truly here to help. That sounds more than a little egotistical as I write it. But if you’ve been looking for reliable, timely, well-researched foreclosure information that isn’t aimed at trying to get you to sign up for something, I’ll bet you agree with me. Please let me know in a comment below if I’m right or not.
Now, of course, I don’t do this completely out of the goodness of my heart. I do try to make some money too. Honestly, most of the income comes from the Google AdSense ads you see in most articles. But I’ve got my Hassle Free Hardship Letters manual for sale as well as other products in development that are meant not only to help but to bring in some money too. Just wanted you to know (as if you didn’t already) that this isn’t a non-profit organization or blog.
So why did I choose today to rant?
Because part of my research for my product development is to go out and look at as many other foreclosure-related sites as I can. And honestly, I just got my fill of them today!
What’s the Problem?
As I go from site to site, I see lots of people selling stuff…just like me. But then again, it isn’t like Truth in Foreclosure at all. I go to these sites that expect you to read through their sales letter or watch their video and then give them $29.97 for their book or $49 for their video or fill out an “information form” so they can contact you about modifying your loan.
How stupid do they think you are?
I guess it must work…at least a little bit…or they wouldn’t keep doing it. I guess the cost of getting leads to their pages so they can hock their wares is so small now they can afford to do it forever.
I watched videos that tried to play on your fears…one even ended with the stern warning that 4 out of 5 homeowners that attempt to modify their loan fail. I guess that’s supposed to scare you into using their service? And besides, even if that were true at one point, it isn’t any more. Most lenders (from what I’m told) would rather speak to a homeowner now than a loan mod company rep. The one possible exception is if you have a HUD Housing Counselor call…they still like to talk to them.
Which leads me to my second gripe…
Hardly any sites out there make any attempt at all to keep up with the changing lending and government environment. I mean, for goodness sake, the rules for lenders and servicers and the tactics homeowners can use to seek relief are literally changing on a weekly (and sometimes daily) basis.
But these sites never go back and update their stuff. I’ve looked at Squidoo lens, HubPages, company web sites, Ezine Articles, and anything else I can get my eyes on. Very few, other than Truth in Foreclosure ever bother to update or correct their content.
They post it once and then forget it…because they’re just trying to get traffic to their sales page and make a quick buck off you. They say they’re here to help…but only if your situation makes them money.
It makes me sick…
What really puts my shorts in a bunch
Everyone’s focusing on the wrong things!
Doesn’t matter whether you’re listening to the President, Congress, or all these web sites…they all focus on keeping the homeowner in their home.
But that’s IT!
I think keeping homeowners in their home is important too…but let’s be honest! It’s impossible to do in a lot of cases. There are a lot of people that simply can’t afford to stay in their homes under any realistic scenario.
Why do I say that?
1. Any workable solution had to be a give and take between the servicer and the homeowner. The fact is, all mortgage holders have signed a legally-binding contract to repay a specific amount of money. And now, by requesting a loan modification, they’re asking the servicer to set aside that agreement and begin a different one. The lender should give consideration to your new situation and the country’s economic situation, but you also have to give consideration to the fact that the bank is a business and is trying to stay in business. If they gave every homeowner a principle write down and a low payment, they’d go out of business. While you may not care if your servicer goes out of business, I’ll bet the families of the people working at your servicers care. All I’m saying is if you don’t have enough income to support a realistic mortgage payment, don’t expect your servicer to modify your loan because they won’t.
I know there are a lot of predatory loans out there as well as Truth in Lending and RESPA violations. I don’t discount the fact that you may be in a bad loan and should be given every opportunity to get into a good loan. You should be given that opportunity. But at the end of the day, if you don’t have enough income to pay a realistic mortgage on your home, there’s a very high chance you’re going to lose your home to foreclosure.
2. All the focus on saving home gives false hope to people in unsalvagable situations and extends the foreclosure crisis in the country. I’m a believer in the free economy and as little regulation as possible. All the government intervention just leads to more intervention because of unseen or unintended consequences. Every time a new program comes out, thousands of homeowners that had decided to move on with their lives start to think they might have another chance to keep their home. And while the new program will help some, those it won’t help get their hopes smashed yet again.
3. The biggest problem I see with this mis-placed focus is that it makes you reactive instead of proactive. The promise that a government program is going to save your home lulls you into only thinking about how you can prove to your lender that you qualify. And while this is necessary, of course, this laser focus keeps you from seeing your whole housing situation as just one part of your life. Whether or not you qualify begins to take up your every waking thought.
A more healthy response would be to “hope for the best, but plan for the worst.” Of course you need to do everything you can to make sure your lender gets your information and processes it. But you should also devote some time to planning what you’re going to do if the lender turns you down. Are you going to move? When? How? Does it mean new schools for the kids? Should you move closer to work?
All these questions (and many more) must be answered if your package is turned down. Doesn’t it make more sense to plan all this out ahead of time rather than doing it at the last minute?
The problem is not just keeping people in their homes…it’s much larger! Don’t just save your home…save your way of life!
Help Me (and other Homeowners) Out
I hope this post stirred some feelings in you…please share them as a comment. Please keep it clean and respectful, but also honest and open. Do you agree with me or disagree? Am I on target or off base?
If you have a web site you go to to get foreclosure-related information you can trust, please share it so others can benefit too.
You’re not in this alone…so don’t go it alone. Share your comments and help bring hope to a hopeless situation.
Tags: opinion
June 3rd, 2009 at 6:46 am
Totally disagree that foreclosure should be an option available to the banksters.
When people lose their homes, they lose everything and have nothing to lose so when civil unrest breaks out, so fair warning.
It is important to fight the banking class and give power to the people. All parties gambled that the party would go on. All parties have lost that bet. Why reward the bankster? They’ve already received our bailout money from TARP which should have gone to those trying to salvage their homes.
Most lenders idea of working with you to modify is a complete joke and a travesty. The senate failed us miserably by being bought by the banking lobby and not allowing chapter 13 judges to adjust mortgages to fair market value.
Flame on.
Reply
June 3rd, 2009 at 8:26 am
You mentioned that most banks now want to talk to the borrower rather than a mod rep. Well Dah!! They always have. Of course they have always wanted to talk with the stressed out, emotional, scared homeowner who doesn’t even understand what kind of a loan he got himself into! Do you think they ever want to talk with a detached, third party who knows what they know and is not intimidated by their rhetoric? Someone who they actually have to negotiate with? Try making an 800 call to nowhere sometime!
I’m working for one of those modificiation companies and we help people when they can be helped and give them back their hard earned money when they can’t be. I talk to folks every day who have tried to talk to their lender and have screwed it up or just been so intimidated they quit. It’s a lot harder to help those cases but most of the time we can.
You mention there are lots of sights like yours but are just selling stuff and not being updated. Some are ripping folks off right? Well, why doesn’t the government try to shut you down? They are trying hard to shut us down whether we’re really helping people or just ripping them off. Bottom line is that banks would rather talk to the borrower!
Get it!!
Reply
Todd Temaat Reply:
June 7th, 2009 at 8:10 pm
Thanks for writing and for trying to help people modify their loans. It’s an honorable job as long as you do it right.
My point about homeowners calling rather than having someone call on their behalf is something I believe has changed since President Obama’s program began. It used to be (like you say) that banks preferred to talk to homeowners because they could take advantage of them, delay the process, blame it on the homeowners, and then do whatever they wanted to with the loan. But now, with all the standardized mortgage and modification guidelines, they can’t do much of that any more unless the homeowner doesn’t qualify for a Home Affordable Modification.
The standardization and streamlined procedures are probably the biggest benefits the Home Affordable programs bring to the table and, in the end, help both the homeowner and the lender.
Just so you know…I used to negotiate mods, repayment plans, etc just like you but I got out of it because of the legal liabilities and because I didn’t want to spend my life on the phone carrying on frustrating conversations. I decided to help people by producing complete, timely, and correct information products instead and bring hope to hopeless situations through spreading expert information.
Reply
June 3rd, 2009 at 10:37 am
Foreseeing foreclosure, a year ago, I contacted “H.O.P.E. Now” that President Bush implemented for homeowners in distress. I worked closely and keep in touch with them on a month to month basis for approximately 6 months. During this time, my ARM balooned and I was no longer able to make the payment. H.O.P.E Now assured me that my mortgage company could not start foreclose proceedings since they were in touch with my mortgage company. Unfortunately, that wasn’t true as I came home one day to find a flourescent orange foreclosure noticed posted to my front door. Needless to say, the counselor that was assigned to my case, had basically been bluffing me. It took speaking to the director at H.O.P.E Now after receiving the foreclosure notice before any action was taken on my case. After all that stress, I did receive an affordable loan modification, however, now I’m under water (owing more than my home is worth).
Reply
June 3rd, 2009 at 11:47 am
There is no one specifically guilty of getting into the housing mess and all that it has brought. However, one can’t be blamed if they “think” they can afford a house and they have been taken advantage of, but, translate into millions of loans which translate into “billions” for “investors”. Who is the greedy one??
Then to add insult to injury, you have to pay for the lender to listen!!
Reply
Todd Temaat Reply:
June 7th, 2009 at 7:58 pm
I agree many people were taken advantage of and steered into mortgage products they couldn’t truly afford. It’s unfortunate and must be corrected…as long as they can truly afford the home now.
Check out my “Are Banks Too Greedy” article. I wrote it about 4 months ago discussing this very topic.
Reply
June 3rd, 2009 at 1:49 pm
I agree with a lot of things said here. My gripe is these services are to be used to help those that can stay, stay and those you need to move, move on. I like “Don’t just save your home…save your way of life!” I am a Realtor that works to try and help regardless if they can stay or need to move, and this is all laid out to them during a consult (free of Charge). everyone likes to make money, but the fact is there are a lot of no a counts out there that make it tough on those who are really trying to help.
Reply
Todd Temaat Reply:
June 7th, 2009 at 7:54 pm
You’re right…there are a lot of people trying to help homeowners do what’s best for their situation…and there are a lot of people just trying to make a quick buck off someone else’s misfortune. I think it’s great you help people evaluate their situation…that’s one of the most critical steps that must happen before anything else can.
I don’t have any issue with paid loan mod companies, mortgage brokers, information publishers, or real estate agents in theory. Just when they try to take advantage of people or give them misleading or incomplete information.
Although, the information does change on an almost daily basis, so what is complete and correct today might not be tomorrow…and it’s hard to go back and update things. I know from trying to keep up this site…it’s a constant struggle.
Reply
June 3rd, 2009 at 3:07 pm
My husband and I are one of those people you are ranting about. We however are able to pay the mortgage but not the ARM that goes up 5% every six months and pay high property taxes, stormwater taxes, house insurance all out of our pockets. Getting a mod is a joke. I am not leaving my home without a fight.
Reply
Todd Temaat Reply:
June 7th, 2009 at 7:49 pm
Thanks for commenting…I didn’t mean to imply you shouldn’t fight for your home. You should fight…but you should also prepare for the worst case scenario, which is losing your home. I see too many people that focus on saving their home to the point they completely neglect everything else.
Reply
June 17th, 2009 at 10:00 am
Hi Todd!
Many, many thanks for your website and valuable information. I am facing either loan modification (bank has offered a great monthly payment, with rising adjustable interest rates in years 6-8, BUT a HUGE balloon payment of about $100K at time of “payoff”- whether through sale or maturation) or the possibility of a short sale or, lacing that, a foreclosure. The bank hasn’t even addressed the second mortgage yet (same bank). My home is underwater by $70K. I am 55 and my husband (who is not on title or loan) is 60 years old. Our dilemma is how to choose the best solution. We wanted to be able to live here for a few (4-7)more years before relocating into a retirement-style community. Would it be wiser to keep our home and take the modification (we are 3 months in arrears) or short-sell our home now and move on? If we take the loan mod, would it result in a bigger problem in 4-6 years when we wanted to relocate? We cannot imagine EVER being in a position in our remaining LIFESPAN to pay off such a huge BALLOON amount. Have you seen or heard from anyone else with this dilemma? Is there someone we can contact who would work through this with us? (We were dealing with the HUD Community office, and she said simply to choose for today and worry about tomorrow when tomorrow comes.?!) I trust your answer, and I love your rantings!
Reply
Todd Temaat Reply:
June 18th, 2009 at 7:20 pm
Thanks for writing. It sounds like the way they got the low payment was to forbear $100,000 of principle and then refigure a payment based on the new, lower principle balance. Of course, they still want you to pay them that $100,000, though, at some point in the future.
The only way I can see you being able to pay off the first (with it’s balloon payment) and the second is for the home to appreciate enough to cover both of them. And that doesn’t seem very likely to happen in the next 4 – 7 years in most parts of the country.
How likely do you think it is that the home will appreciate enough in the next 4 – 7 years for you to be able to pay off all the loans and move away? That will be your determining factor, I think.
I think your best option would be to put the home on the market and try to short sell it. Be aggressive in your pricing and keep dropping your price every week until you get an offer. This keeps it on the new listings sheets every week and will help you get showings once it’s in the right price range. While all this is going on, save every penny you can because you’re going to be moving and even though your credit will be shot, having enough cash to pay a deposit and several months of rent in a new place will be key to smoothing out the move.
Finally, you might think about other options such as a forensic loan audit to see if your loan has predatory markers or Truth in Lending violations in it. It’s also possible…although no guarantees for sure…that a paid loan mod company could get you a better offer from the bank. I started out as a paid loan mod company, so I have people I trust to work for you rather than just take your money. If you want some references for either loan audits or mods, please contact me by e-mail.
You’re right to be cautious of the advice you got from the HUD office…that’s the same line of thinking that got the country into the financial pickle it’s in now.
Best wishes…I hope this helped some…
Reply