Foreclosure Defense Florida

Conspiracy of Confusion- The Failed HAMP Mortgage Modification Program

It is widely accepted that Obama’s HAMP mortgage modification program is a failure, not helping anywhere near the number of homeowners leaders estimated it would help.   If you’re facing foreclosure in Pinellas of Florida or are simply trying to get some reduced payments on your mortgage you will find trying to get a modification a very frustrating process.   Virtually every client reports spending countless hours on the phone with lender representatives and sending documents back and forth again and again.   I was at first incredulous, thinking that one or two lenders were getting it wrong, but I am a first hand witness to an entire industry that is broken down. If you’re trying for a modification or short sale, be prepared for months of frustration and hours on the phone…..and you probably wont get what you want.

The Curious Case of Canceled Sales

Attorneys and other opponents of the lenders and the mortgage meltdown are at a bit of a loss regarding why the system is broken down, but several theories are supported by facts. Most of the major lenders reported major (breathtaking) profits during the last quarter of 2009.   Curiously many of the same lenders delayed or simply canceled foreclosure sales that they had every right to conclude during the last quarter.   They had no legal reason to cancel the sales and some cited compassionate grounds for doing so. (Ha Ha)   Bottom line is I believe some lenders canceled sales in order to depress their earnings. (Can’t get to high on the hog just yet.)

Today’s Wall Street Journal confirms that one effect of the canceled sales and slow pace of modifications is fewer home on the market and an increase in overall value.

The number of such homes available for sale dropped to 637,000 in November 2009 from 845,000 a year earlier, Barclays Capital estimated. Barclays expects the number to start rising again as people who don’t qualify for a loan modification or don’t want one lose their homes, and peak at 747,000 in April before declining gradually.

As recently as September, however, Barclays expected a peak of nearly 1.2 million foreclosed homes for sale in mid-2010. “Our projected peak keeps getting lower, the longer banks delay foreclosure sales,” spreading the pain over a longer period, says Glenn Boyd, a senior researcher at Barclays.

That has implications for pricing. The S&P/Case-Shiller 20-city home price index is down 29% from its peak in 2006 but has leveled off in recent months as fewer foreclosures have hit the market.

As of Sept. 30, about 7.5 million households were behind on their mortgages or in the foreclosure process, according to the Mortgage Bankers Association, a trade group.

Bottom line is those 7.5 million homes are going to continue to have a profoundly negative effect on the real estate market and the larger economy for years–even decades to come.   And as unemployment continues to rise, the number of households in trouble will only increase…..this is not just a problem for those 7.5 million in trouble….it’s everyone’s problem and we need a better system to address the problem.

Full Text of Article Here.

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