Transition Whatcom

News Release: January 20, 2010

 

"Attorneys general, state bank regulators urge more help to prevent foreclosures

 

State Foreclosure Prevention Working Group report says the foreclosure crisis is worsening, despite efforts

OLYMPIA – A group of state attorneys general and banking regulators predict a devastating acceleration of foreclosures unless policy makers step up efforts to assist homeowners.

 

The State Foreclosure Prevention Working Group issued a report Wednesday that cited disturbing trends including a rising tide of delinquent mortgages outpacing servicer outreach and loss-mitigation efforts. The report also offered recommendations for action.

 

“Despite significant state and federal efforts to assist homeowners, more foreclosures are predicted for this year than occurred in 2009,” Attorney General Rob McKenna said. “Programs to help prevent foreclosure are jammed up, while 60 percent of delinquent borrowers aren’t getting any help. Servicers must do more.”  (edit: Servicers are Banks or Mortgage Companies who handle your payments, i.e., the name of the bank on your mortgage statement.)

 

Findings of the Working Group Report include:

·       Six of 10 seriously delinquent borrowers are not even involved in loss-mitigation efforts. The federal Home Affordable Modification Program (HAMP) has helped slow down the foreclosure crisis, but current efforts have been insufficient to get ahead of the problem.

·       Both loss mitigation and foreclosure efforts appear to be backlogged. The average time to complete a loan modification for some servicers is more than six months. Many homeowners with trial modifications are not yet qualified to transition to a permanent loan modification.

·       Most modifications result in payment reductions, but principal reductions remain rare. Given the correlation between negative equity and likelihood of default, the failure to write down principal in connection with loan modifications is a glaring flaw in current efforts.

·       Prime loans are increasingly driving the rising delinquency rates. The foreclosure problem is broad-based and not isolated to poorly-written or exotic loan products."

 

The report goes on to make some urgent recommendatons. McKenna encouraged Washington residents facing foreclosure to seek help. If six of ten homeowners are not seeking help this bodes very badly for the future economic well being of communities where foreclosure rate are high.

 

Whatcom County is a target area for foreclosures and we should be proactively seeking help for people who don't know where to start. Please urge anyone you know in financial distress to contact the Washington State Homeownership Information Hotline at 1-877-894-HOME (4663) or visit the Attorney General’s Web site at www.atg.wa.gov/foreclosure.aspx for additional resources

 

Making Home Affordable has produced a raft of informational YouTubes to assist people to find the free resources available to homeowners in distress. http://www.makinghomeaffordable.gov . I do not personally endorse these organizations because they are only providing information and they send you back to your bank to negotiate for yourself. They do provide a wealth of information on how to apply directly to your lender if you have the stamina and negotiation skills. The lack of success by consumers to date speaks for itself:

 

 
Less than 7% of modifications have succeeded to date. Most people give up or are 'tricked' out of the program by confusing, conflicting communications from their lender. Many homeowners in 3 month Modification Trials (for five and six months) now are still being harassed with foreclosure proceedings. 
 
I recommend homeowners who are experiencing difficulty with their bank tell their story by writing their Congressional Representatives: www.congress.org. I know one person who's Senator responded by email and is 'looking into it' after actually answering the phone. Home owners willing to speak up about their experience are the only ones who make an impression upon our elected decision makers. Interested parties in the real estate industry, like realtors, appraisers and loan officer are largely ignored.
 
Meanwhile, you just have to be hypervigilant to get help. That's what works.  

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