Lack Of Communication Leads To Foreclosure Problems
This has been a target of mine so I will continue to beat the drums. There must be an easy way for borrowers to reach their lenders when facing foreclosure issues.
How can the mortgage holders be so out of touch with their borrowers when the costs are so high. With the recovery rate at only 68 cents on the dollar it is mindboggling that borrowers can not get in touch with their lenders when facing a problem with their payments!
The costs are so incredibly high on either end of the transaction that no one can possibly win.
The unexpected consequences of the subprime meltdown and current credit crisis is that the removal of the human element in lending saves significant costs at the origination of the loan with a huge downside when things turn sour.
The Daily Herald has more on this story today:
When a homeowner faces loan default, their problems are exacerbated when they can’t get through on the phone to talk with someone or are shuffled among departments.
“When a homeowner gets a foreclosure notice and calls up, they often get layer after layer of what button to press and then music when they’re on hold,” said Steven Bashaw, a Lisle attorney specializing in foreclosure and real estate matters. “Ask anyone who’s done that. They’ll be placed on hold and wait, and they’ll wait and they’ll wait. Then it’s five minutes to five o’clock, and they’ll say they can’t get anyone today, call again tomorrow. I hear that constantly.”
Mortgage companies and banks have been under pressure to please shareholders while curbing the defaults. Still the numbers of foreclosures continue to rise. via the Daily Herald
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Comment by Mark Harrison on 27 November 2007:
As I understand it, one of the huge problems is actually working out who currently “holds” the loan.
I’ve had to do quite a lot of research about “securitisation” for an article on the UK Housing market, and this seems to be one of the recurrent themes:
When a lender securitises a loan, they no longer have a particular interest in resolving issues, because it’s not THEM who stands to lose through default
Comment by RIchard Geller on 27 November 2007:
I just blogged on your post, it’s just what we need to continually remember.
Great blog, thanks
–Richard
Comment by Cleveland Real Estate on 27 November 2007:
(Not to mention the lack of English speaking customer service reps that prolong the “assistance” process.)
Frustrating.
It’s an awful situation starting from before the mortgage holders get involved. The reason so many are in this sitution and not being cared for is the same boat they were in before the payments were being made. The ones who started these loans, appraised them, funded them, and ultimately sold them the homes. They are just as involved in the national disaster as the final mortgage holders.
There needs to be accountability, responsibility, and assistance for the many thousands facing ARMS, 0 equity to refi, and payments that are no longer affordable.
Ignorance is not an excuse obviously. The ones signing the paperwork and taking on such risks are ultimately responsible for the final outcome…but with the rapid rate of foreclosure and ARMS coming into play…You’d think the greed and money behind all this would settle… perhaps lowering the interest rates to assist and save the loans… I’ve seen many go from a 6% to an 11% and the homeowner and bank suffers… It’s a lose, lose.
When this happens, the homeowners that are in good standing and need to sell or refinance can’t. They face the downward track of neighboring market values declining and they’re stuck as well. Ultimately the mortgage holders lose again with the lack of new refi’s.
Someone needs to win. As it stands now, it’s the investors buying up rental property. They will see the greatest return out of all of this as thousands of decent homeowners flood into rental properties.