Helping Homeowners
http://thedianerehmshow.org/shows/2010-03-29/helping-homeowners
Close to one out of every three homeowners in America owes more on their mortgage than their house is worth. Many are expected to walk away from underwater loans, further depressing the real estate market. How the administration is revamping its foreclosure prevention efforts.
Guests
Julia Gordon
senior policy counsel, Center for Responsible Lending
Edmund Andrews
correspondent with TheFiscalTimes.com and former reporter for The New York Times. Author of 'Busted.'
Renae Merle
reporter, The Washington Post
Comments
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Diane,
Three years ago I took out a first and second mortgage directly with the same lender. The bank handled the appraisal. A few years ago my lender was purchased by Wells Fargo. Last fall I tried to list my property for sale and was told my house was worth almost half of what I owe. Alarmed I contact my lender and was told there was nothing they could do. I have never missed a payment. I live in an area of Pennsylvania that has not seen high swings in values, certainly not a 50% drop. Who do I contact? What are my options? What incentives does my lender have to help or even work with me?
Byron
York, PA
I have a Mortgage that was originated with a higher "rate" than it should have been with my good FICO score 2 years ago. Since then my Mortgage has become underwater and I have had a reduction in income. I have managed to stay afloat due to family members pooling money to pay the monthly payment. I have continued to stay current. I am looking for a rate reduction and/or a balance reduction. My loan has been sold to Fannie Mae and Citimortgage is the Servicer. I have repeatedly filled out applications and originally Citimortgage shifted me to CCCS a consumer service and they recommended forclosure in November yet I am current due the pooling of funds of family members and friends. I can also NEVER get a hold of anyone on the phone who is remotely helpful. It is clear that a modification of reduced rate and/or balance reduction would resolve my issue.
What can I do to get adequate help??? I can't get a hold of anyone!!!!!!! Do I need to stop making payments in order to get someone's attention?
Reston, VA
Why should I have any sympathy for housing investors that made bad business decisions. No one twisted their arms to purchase overpriced homes. If the markets in their area depreciate, it will open the markets to more buyers and bring the market into line with realistic evaluations. Here in Texas we never had a speculative market and don't see our home values dropping like those in California. If we bail out housing investors (homeowners) then we need to bail out stock market investors who lost money on bad investment.
A motgage is a contract. The lender did lend the original principal amount and kept up their end of the contract. If people walk away just because they are under water they breached ths contract. If this behavior continues the whole concept of a contract is no longer valid.
Diane,
A job change had us move to Florida in 2005 near the height of the market . The principle on our loan is $264,000 but it is now worth $177,000. The ratio of what we now own divided by what our house is worth is 149%, well above the 125% maximum needed to qualify for help as a borrower still current on their payments. In reading the new program it would seem that the only help available to me is to undergo a short sale which would relieve me of my huge financial shortfall and provide $3,000 for the move. I simply don’t understand why people in my situation are not provided with the ability to refinance. Can someone explain why and possibly suggest how I can get some help. ---Jim
My family used to have a combined income of nearly $200K/year. My job was eliminated and we lost about 50% of our income, despite bills continuing at 100%. We still have much too high an income to qualify for most help. We have done fairly well at treading water, but realize that we are slowly sinking.
Why are we not addressing the credit reporting aspects? We are considering downsizing, but it may be difficult because of a a couple of late payments (less then 30 days). Banks are tighter with money, despite the fact that we are actually looking to reduce our debt.
We don't want "help", we just want understanding.
I am a Democrat, and I generally support the Obama administration's initiatives. But this program seems both doomed to failure and grossley irresponsible. The way it is written, the banks have no incentive to move borrowers into new FHA loans unless the borrower is behind payments. To suggest there is no such incentive seems disingenuous at best.
I purchased at 220K with 10% down into a standard 30 year loan, albiet variable. I am 33 now. My home is now worth 110K and I have been making extra payments when I can in effort to get to zero by the time I am 45 instead of 50. I would be ELATED just to refinance into a fixed rate, but the previous nor this program provides me no such avenue - particularly since I have been making extra payments since the bank looks at me as a cash cow now.
Instead of a convoluted system that seems to reward withholding payments with priciple reductions, why not just move all underwater borrowers (only on a primary residence and only on NON-equity lines of credit) into temporary 1% FHA loans until they are back to zero?? At that point, said borrower could sell the house for nothing, or the loan would then return to the original terms?
Thanks.
Steve in Fairfax, VA
Great show! I think the most telling answer to this problem is the lack of regulation in the mortgage servicing industry. There is NO incentive to work with borrowers -they make more money through foreclosures and fines and penalties -yet spin it to be more about the irresponsible borrower. Don't fall for that.
Studies such as Center For Responsible Lending and Katherine Porter offer the true insight into the real problem.
http://www.responsiblelending.org/policymakers/testimony.html
http://www.utexas.edu/law/journals/tlr/assets/archive/v87/issue1/porter.pdf
Have your voice heard. Share your story at http://www.ShameTheBanks.org
for more see:
http://www.huffingtonpost.com/richard-zombeck/shamethebanksorg-gaining_b...
Something like 25% of Americans with mortgages are underwater so far that the debt they've accumulated is not beneficial anymore; a teacher and cop in California who are $200,000 underwater: they won't see the value of their house return within their lifetime. It sounds simply awful.
If we live in a capitalist society, which conservatives tell us centers on a 'me first' attitude toward economic decision making, rational actors will follow those practices which ensure the economic greatest benefit. Like a bank or any other commercial entity, a mortgagor should be able to exercise strategic default when it's in their interest to do so. Any business, that hopes to remain in business will walk away from a underwater property in that situation. But for homeowners, there's this HUGE glaring double standard, that the average guy in a capitalist society shouldn't do what any corporation or business would do when confronted with an underwater property.
However, the moral violation cultivated and inflicted by society (gov't, banks, the media) for defaulting on a mortgage is another story, such that the fear and guilty emotions that Americans feel over the prospect of default is so strong that it keeps them from acting like the voracious capitalists that punditry tells us we are. Until we there's more understanding of the fear and guilt surrounding default, there's no end in sight to this mortgage mess.
I found this discussion inadequate, surprising because your shows are usually right on the point.
Please consider bringing Brent T. White, University of Arizona Law School Professor, on your show. He has examined and written about issues of the housing crisis, underwater mortgages, government response to housing, the credit problems that may result from foreclosure and how they can be remedied, and more importantly the guilt that homeowners feel about walking away. He explains that this is the result of a political and cultural double standard which inflicts that guilt in the first place. VERY ENLIGHTENING!!
B.T. White "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis."
articles.latimes.com/2009/nov/29/.../la-fi-harney29-2009nov29
www.sacbee.com/static/weblogs/real_estate/SSRN-id1494467.pdf
Thank you so much for bring more attention to this matter. I am a home owner in the midst of foreclosure, for me and my family it was a financial decision that was the best for us. After my one attempt to fax my personal information to god knows where only to be told two days later that they never received it was enough for me to know that this process and program was an udder failure.
I like many others have found that each new program that is created is with the interest of the banks and not the homeowners. Each program is a failure. We are at a point of no return and from the ashes of this we've created a website www.shamethebanks.org to give homeowners a place to share their stories. The site is non-profit and the creation of it was to give everyday people an opportunity to share their struggles with the many other who are in the process or entering into it.
Thanks again for your coverage, thousands of struggling families might very well benefit from your time and attention.
Teresa B. - OH
Diane says lenders need an incentive. Why? Why in these tough times for the entire nation, why are corporations exempt from helping out? Why can't we ask companies to put patriotism ahead of profits? Why does everyone have a responsibility to help BUT corporations? Why should anyone support those companies who feel they have no responsibility to help resolve these tough problems?
For me I think everyone should help in these tough times. No one or group is exempt.
The Washington Post had an excellent article this Sunday highlighting a new program by Bank of America to forgive 20~30 % of the debt of homeowners with underwater mortgages (home is worth less than the mortgage). The program is targeted to help 45,000 homeowners at a cost of $3 Billion to B-of-A (a loss they may have had to incur anyway with foreclosures).
The example in the article is of a homeowner that has a loan of $250k for a home currently valued at $200k. B-of-A would issue a new loan of $200k and if the homeowner makes all the first year payments, B-of-A would forgive $10K of their debt. The same goes for years 2 and 3. For the 4th & 5th years, the home would be reappraised and if the owner still has negative equity the same $10k debt forgiveness would apply. If the home has increased in value above negative equity then the program would cease. That's my quick take and I'm sure we can learn the details, but for now, this sounds like the solution we wanted from the very beginning of the mortgage crises.
In regards to commercial mortgages that have to be paid off/refinanced within 5 years, we need to extend that deadline to double or more of that time to prevent a similar crises in that industry.
Principal forgiveness program may offer relief for underwater homeowners
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/26/AR201003...
I was astonished to hear one of Diane's guests offer an analogy of rearing for children for homeowners under water.
She noted that her child (a six-year old?) would always choose dessert over vegetables if she, the Mom, let her...and moved on to compare the banks "peddling mortgages like candy" to this statement.
This was in response to the gentleman who had simply noted that he made a poor decision in taking too big a loan for his income and calling that irresponsible of himself.
How demeaning that woman's analogy is to adults. They are NOT children. At least allow grown people the dignity of acknowledging mistakes as they move forward with their goals of having better judgement in the future.
So, in her view, she expressed that these people are just poor, poor childish dumb victoms." They can't even be expected to behave autonomoustly in an adult fashion.
How demeaning, how demeaning. I wish that woman would aim her parenting efforts at children, and perhaps only her own children. Grownups make mistakes, account for those mistakes and move forward. How about aiming for dignity.
I still don't quite understand why being "underwater" is a problem. It seems to me the problems are changing payments, job loss, or other things where the net affordability changes, or if you have to move and can't afford to pay off the difference. But having a mortgage that's underwater in itself isn't really the problem, and I don't understand why it needs to be remedied outside of the other issues.
Diane -
BOA told me I qualified for the the refi program you mentioned. I am current, no late payments, but wanted to refi to get a better rate. I have 85% equity. The problem was the closing costs - $6,719!!!! I passed on the refi.
Diane,
We were just informed that our lender will now be collecting an additional 16% of our escrow amount (i.e. added to our payment each month) as a reserve fund to offset the possiblility of sudden insurance or tax increases on our home. The letter we received from this largest of home lenders informed us that this was permitted by a recent federal housing law and would begin in May.
We are current, pay extra every month, and have never been late (3.5 years).
Thankfully, we own a modest home and can afford the increase (about $85/month). However, for those who have larger homes and thus larger escrow payments for taxes and insurance, a 16% increase in this economy could send them into foreclosure.
The administration and congress are supposed to be passing legislation that helps homeowners, but this only hurts us both in terms of our monthly cash flow, which is spending power for the economy, and in terms of the investments we could make with this money. Instead, the lenders are the ones who will benefit, taking billions more from millions of borrowers and investing it so that THEY make money off our money instead of us.
Thus, despite the rhetoric, it is business as usual in DC with the middle class suffering and the banking interetests benefitting.
-Miles in Houston
I just found this site and applaud you. I have been in loan modification hell with JPMorgan Chase for 15 months. I did not think I was buying too much home, but I did go for no money down so in that regard I should have known better. With loss of 1/2 of the income that was contributing to the mortgage, and with the ARM adjusting up and up, I did look into selling. That is where "underwater" comes in to play. No way could I sell for what I owed, so I would still owe the balance. In CA even if the bank forgave this, I would have owed taxes (although that may be changing this week if the governator signs SB401). The lies, the lies, the lies and the deception of this bank and others is what is so very over the top. You who are not in loan mod hell have no idea what trauma these people put us through.
You may call the bank one day, and they say you are approved for a trial. You call the next, and you are denied. You call right back, get someone else and they say you are in loss mitigation and they need another copy of all your paperwork ..... this is just a short snapshot. There are thousands upon thousands of us going through this. Some of us are fighting back, and telling our stories on www.shamethebanks.org. Hopefully with the work being done here and at our site and others we can change this.
WHERE IS MY LOAN MODIFICATION BANK OF AMERICA?
If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!
BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled "Piggies" I invite you to listen to this song on youtube and see if it appropriately fits.
http://www.youtube.com/watch?v=NTmeHM-Hojg&feature=related
Have you seen the little piggies
Crawling in the dirt
And for all the little piggies
Life is getting worse
Always having dirt to play around in.
Have you seen the bigger piggies
In their starched white shirts
You will find the bigger piggies
Stirring up the dirt
Always have clean shirts to play around in.
In their ties with all their backing
They don't care what goes on around
In their eyes there's something lacking
What they need's a damn good whacking.
Everywhere there's lots of piggies
Living piggy lives
You can see them out for dinner
With their piggy wives
Clutching forks and knives to eat their bacon.
John Wright vs. Bank of America Lawsuit at:
http://news.yahoo.com/s/prweb/20100323/bs_prweb/prweb3766544_1
John Wright vs. Bank of America Lawsuit at:
http://news.yahoo.com/s/prweb/20100323/bs_prweb/prweb3766544_1
When I filed my lawsuit against Bank of America, myself and United Law Group thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath.
Please stand with me and United Law Group and send an email to Bank of America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods.
Divided we might have fell America, but united we must stand!
Please send your email directly to Bank of America and include the following:
1. Your name
2. Your complaint concerning your experience with Bank of America.
3. Please end your email “I support John Wright vs. BofA Lawsuit!”
4. Please send a copy of your email to johns-wright@hotmail.com
5. Please send your email to both BofA link below and the CEO email
BofA Linked Email:
https://www3.bankofamerica.com/contact/?lob=general&contact_returnto=&st...
CEO Brian Moynihan:
brian.t.moynihan@bankofamerica.com
I have a Wells Fargo First and second mortgage and We are trying to refinance to change our terms. We were told that we are not qualified to refinance because there are not comparables around our neighborhood, and we have been in the house for 62 months, we are both employees in full time positions, we are always pay our mortgages on time, and we have a great credit score. Because we are good citizens we are not able to qualifiy for assistances programs. Can you find out if you can help us.