Today it seems like more and more people are stuck in what real estate experts are calling ‘mortgage modification hell’ – that spot between the collectors and the lenders. The housing crisis has affected so many of us and it doesn’t seem like it’s going to get any better any time soon.
So, what is this ‘mortgage modification hell’ we’re talking about? Basically, it’s where the homeowner just can’t move in any direction. Lenders won’t talk to you unless you’re late on payments and if you are late, they really just want you to discuss your options with the collectors. Where does it end?
The discouraging thing is that mortgage modification, according to the big banks, is for people who are already behind on their mortgage payments – not those who need a little help. So, if you want to modify your mortgage, you have to actually move into the category of people that don’t pay. Who wants to ruin their credit like that?
This is where it gets tricky. If you want to get a mortgage modification, you really do need to start falling behind on your house payments. As uncomfortable as that may sound, many people have resorted to that in hopes of saving their homes. However, once you stop paying your mortgage, those collectors start calling – about two or three weeks after the first payment is late.
It is the collection calls that can overwhelm already struggling homeowners. The calls border on harassment as they come in all day and frequently into the evening hours, despite FDCA regulations. Here’s where the real kicker is – the banks are paying quite a bit of money for collectors to call their past due customers. Why don’t they just have loan modification specialists call instead?
That would make too much sense, wouldn’t it? If banks actually did something that made sense during this financial crisis, maybe our economy would move out of its current status a little faster!
Though President Obama recently announced his administration’s mortgage reforms, we’re still curious as to how they will actually work out. We are a country with crossed fingers, many of us teetering on the fence of living in a home we can afford or slipping so far underwater we may just have to stop paying our bills to break even.
Many homeowners don’t agree with the current model, and we certainly don’t blame them. Having the banks forcefully relocate homeowners, take away their real estate interest tax credits and ruin future ability to even get a rental doesn’t make much sense to us. The overall outcome is the same – housing prices are still falling, the markets aren’t improving, and no one is moving.
Where does it end? What do you think about mortgage modifications and the current practices?