The jumbo loan mod 'pipe dream'
Part 2: Loan mods: Hype or real deal?
By Bernice Ross, Friday, October 2, 2009.Editor's note: This is Part 2 of a two-part series. Read Part 1.
DEAR BERNICE: I received an unsolicited loan modification letter from my lender in December, informing me that pursuant to my lender's acceptance of TARP funds, our jumbo option adjustable-rate mortgage (ARM) was eligible for modification. Our loan had NEVER been paid late and was not in danger of default. Nevertheless, based on income declines of 35 percent in our household, our hardship is real.
We filled out the mountainous paperwork and provided tax returns and every other item they requested. We sent everything to the bank the first week of January. In February, they requested two more documents that we sent the same day.
On March 12, 2009, we received a letter congratulating us on "taking the first steps to save your home." (Mind you, we were not delinquent on any payment.) The letter further stated that our modification package was complete and would be acted upon in two to six weeks. With trust in our lender, we continued to make timely payments that were now coming from savings.
We have not had a single voice mail, e-mail or written correspondence responded to since then. We finally connected with the local manager of the lender's regional modification center who told us off the record that she had never seen an instance where a loan with payments current was modified.
What? We were shocked. She suggested that if we were serious we should skip a few payments. We have. We politely tell the collections people that we have a modification request pending. When they get annoying, we inform them that we, too, are recording the phone call. They quickly hang up.
Today, I sent them a final notice to modify our loan by Sept. 1, 2009, or we will have to walk away from the property. We will stay and care for our lovely 80-year-old historic home and tend the 1.5 acres of grounds until we locate another place to live. Sadly, we will say goodbye to a home into which we poured $600,000 of real money. The gardens and pool will quickly deteriorate. The bank will end up selling it for at least $300,000 less than what it could have obtained by complying with its TARP obligations. Please warn your readers: Don't be among the naive and wide-eyed fools who waited for the loan modification that never came from a lender who never intended to send it. --Jim A. ...CONTINUED
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Submitted by Jon Astaris on October 2, 2009 - 7:52am.
After years of hearing ad nauseam the "market is making a recovery" line, while watching the market fall apart, Ms Ross's usually irrelevant musings have become, in view of the facts, irritating blarney. Most of her "advice" is useless, general observations. As in this case, where a homeowner is suckered into attempting a loan mod, is dragged through the muck and thrown in the street, whereby Ms Ross cheerfully beats the recovery drum. Completely irrelevant, out of place, insulting and offensive considering that this homeowner was in a world of pain. Inman has no business printing such "advice"
Submitted by Bernice Ross on October 2, 2009 - 8:07am.
Bernice Ross, CEO of www.RealEstateCoach.com, home of this year's number #1 selling book at NAR--Real Estate Dough--Your Recipe for Real Estate Success
Jon,
The only part of the market that even resembles a recovery is in the first time buyer market. I track inventory in any market and that predicts prices, pure and simple. Inventory leads by about 6 -12 months what the prices will do. California and Florida were reporting inventory declines in the first time buyer market in a number of areas. As I said in the article, the luxury market is essentially dead. With the $8,000 first time buyer credit ending and today's unemployment figures, the first time buyer market may come to a grinding halt as well. Given that Freddie and Fannie will soon be putting more of their REOs on the market, this may drive up inventory as well.
The borrower who contacted me was not "thrown out." He and his wife made a conscious decision to walk away from the property and had other options.
Submitted by Liz Barkhordarian on October 2, 2009 - 11:20am.
"The market in many places in the country is in the midst of making a recovery. For example, in Orange County, Calif., there are less than two months of inventory on the market in some areas. Two months of inventory means that these markets will stabilize in price. If the inventory continues to be low, prices will begin to increase."
Two months of inventory does not mean that prices will stabilize - here in Southern California it means that buyers who had no chance with the crazy prices of the last several years now see that owning property makes financial sense again to them. It also means that no-one is selling unless they are forced to by changes in circumstances, death, relocation - even then they are leasing if they can.
No one knows if we are in the midst of making a recovery or not. Time will tell.
Love the moment!
Submitted by Jerzy (George) Szkup on October 2, 2009 - 4:20pm.
George Szkup
www.DestinationTucson.biz
Bernice,
As much as I like your column, this time you are "not on the subject". Someone with a high priced property was "taken" by a crook. Your reply does not address this issue - you are talking about "market for first time home buyers". How does this help people not to be "take" or what should they do after they discovered that they have been "taken"?
George in Tucson
http://www.trulia.com/profile/httptruliacomprofilegeorgeszkup/
http://twitter.com/geoszk
http://www.DestinationTucson.biz