The workshop began with a counseling session that gives an overview of how the loan modification process is intended to work according to the Making Home Affordable and HAMP guidelines. Most NACA employees/volunteers were amazingly informed, pleasant and helpful in spite of the hours they are putting in. The workshop ran for a week, 24 hours a day. I often saw the head of NACA, Bruce Marks, wandering the floor and mingling with troubled consumers.
After the initial counselling session, and a wait for many of hours and hours because of the huge attendance, consumers met individually with a counselor either in person or on the phone. This meeting was to determine a budget of what the homeowner could afford and to determine if a loan modification made sense. NACA advisors made recommendations to consumers on spending habits and offered realistic suggestions on budgeting. Consumers were told that homeownership would have to take priority over luxuries such as boats, cars, credit cards and other non essential items. Many consumers were told that a modification could not be accomplished because they either made too much money or simply didn't have enough income to present a case to the bank. In the latter case, if income was due to job loss, NACA would attempt to help get a forbearance with the consumers lender. Regardless of why a consumer fell into financial difficulty there was no finger pointing. The mission was simple - to attempt to save American consumers homes.
In my opinion, NACA is a true grass roots organization with true intentions of saving American consumers homes from foreclosure. They have realistic goals for people who have suffered from predatory lending, job loss or are underwater.
My optimism of how NACA helps consumers began to turn to anger.
During the event, consumers were brought to the podium and spoke about how the attending lenders lowered their rates, granted forbearance and saved these homeowners money and their house. Why was that a cause for my anger you ask?
Simple... if it was not for the workshop where NACA brought lenders and consumers together, these homeowners would have lost their house. Period. Every consumer shared the same story ---lost paperwork, rude employees when contacting lenders which included threats and finger pointing, hold times that went on and on, bad advice from lender loan mod departments and broken promises.
As more and more consumers went to the podium and praised these lenders for helping as they shed tears of joy I just kept thinking to myself over and over... this is nothing but posturing by these lenders... Nothing more than a public relations ploy. Why were these consumers not helped before? Why did they have to drive for hours to attend this workshop, sleep in the chairs overnight and go thru unnecessary stress? What about the millions of American consumers that don't know about NACA or who couldn't attend the workshop who will lose their homes because lenders refuse to communicate?
Short Sale issues -
I visited the Fannie Mae table and met with their reps on two different days. I had one specific question. Why is Fannie Mae not policing the actions of the loan servicers of their product. After all, these lenders don't really own the loan, Fannie Mae does. I got nothing but blank looks, shrugged shoulders and weak attempts from these reps to defend their actions.
I asked them this question. What is the difference between a short sale, a foreclosure and a strategic default in the eyes of Fannie Mae? I told them I understood that Fannie intends to pursue any deficiency balance from a strategic defaulter and that their guidelines have been changed to a minimum of 7 years to be eligible for a new loan after strategically defaulting. FHA has adopted this rule as well....
So I asked this question... If a consumer attempts a loan modification from a servicer and gets turned down because of whatever reason (whether the consumer really doesn't qualify or the servicer flat out has no clue on the programs or how to calculate income or whatever),how do they determine the difference between a foreclosure and a strategic default? Again, blank smiles and shrugged shoulders.
So I asked one more question... If a servicer refuses to work with a consumer and their REALTOR® on a short sale, if they fail to communicate with the REALTOR® after a contract has been submitted, if they demand the consumer sign a new note regarding any deficiency balance or if they just conduct themselves in the typical unreasonable manner in which consumers and REALTORS® have become accustomed to and the house is abandoned by the home owner, how do they determine the difference between a foreclosure and a strategic default? Again, more blank stares and shrugged shoulders. Want to know why? Because they understood my questions and had no answer and they knew that Fannie Mae was not helping consumers and most of all, they were not playing their role in ending this economic crisis.
I asked one more question. Let's assume they sell a home at short sale for 100K less than the balance owned. Now let's look at the other alternative that is so typical these days. The current loan servicer refuses to communicate with a REALTOR® regarding a short sale, the home gets foreclosed on and sells at auction for 150K less than a short sale could have brought. Who wins then? Who at Fannie Mae or at these lenders is in charge of making such horrible business decisions and most importantly, is the American consumer paying for this?
Strap on your seat belts people...
this is how I see it in a nutshell - Real Estate led our country into this financial disaster and it is going to have to be real estate that leads us out. We have a limited pool of eligible borrowers that qualify for loans. As more of these eligible borrowers who seek relief from the government because they are underwater choose to strategically default as they discover they can rent the same house for half the price and decide their credit is a non issue for the next seven years and as the pool of first time home owners shrinks and as eligible move up borrowers can't sell their house because banks refuse to work a short sale and as underwriting guidelines continue to get more difficult.... well this will cause home values to continue to decline... in fact, it already is and will continue the same trend... I believe this country may be headed towards the biggest financial crisis the world has ever seen....
I do not endorse NACA but I have seen with my own eyes how this group can help struggling home owners. Make your own decision....You can read NACA success stories by clicking here.
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