For those of you who have been enjoying the updates of our new real estate venture, we’ll return to that topic next week.
The mortgage industry’s loan modification efforts are going from bad to worse, evolving from a fiasco into a disaster. It’s a case of a vicious circle becoming a vicious vortex. As in many situations like this, there’s plenty of blame to go around.
In the first place, there are remarkably few loan modifications being done. You’d think mortgage lenders would be bending over backwards to keep from having more foreclosures on their hands.
Instead, they’re overwhelmed by the wave of borrowers that need loan modification. Staff trained to handle 1,000 borrowers are now handling 100,000, but - according to reports I’ve read - instead of devising a rational system to handle the deluge, customer service agents are being rude and even outright lying to get people off of the phone.
Understandably, two things have happened. First, professionals in the business community - people with experience such as mortgage brokers, real estate brokers, and real estate attorneys - have realized that they can reap some revenue by acting as intermediaries with the lenders. You’ve seen the ads. But at least they’ve been getting some results, because they understand how the system works.
But of course, at the same time, con artists have also smelled the blood in the water and started charging people thousands of dollars … and have given them nothing in return. Unfortunately, these thieves prey on the very people who can least afford to absorb these losses.
Here’s where the vortex starts spinning faster. To control the con artists, California State Senator Ron Calderon, the Chair of the Senate Banking Committee, has introduced SB 94, which forbids anyone from charging for acting as an intermediary for people needing loan modifications. If you look up “throwing out the baby with the bath water,” this bill will be listed there.
Senator Calderon somehow thinks that leaving borrowers at the mercy of the lenders and their backlogged systems is somehow better. Instead, those borrowers needing loan modifications will be stuck in the queue and lose more time, which will eventually cause more foreclosures.
This bill has already passed in the State Assembly. Contact your state senators http://www.senate.ca.gov/~newsen/senators/senators.htp and urge them to vote against SB 94. If this bill passes, the foreclosure situation will get worse, not better.
