October 1st was a monumental day in the county of Iceland. With a population the size of Los Angeles, Iceland is a country that has been hardest hit in this financial crisis. A small country of conservative values the citizens in Iceland have the largest per capital individual track records for saving money. Maybe it's the cold weather but people in Iceland save their money, don't buy a lot of stuff, pay cash don't use credit to acquire stuff, and have a lot of money in savings in the bank. So how were they rewarded for this fiscal responsibility?
Well their bankers just like ours invested their hard earned monies in the world market in risky mortgage securities. And lost billions.
What makes me and the good folks of Iceland mad - and it should make you mad - is the when the bankers win at their investment game they make billions and trillions of dollars that they keep as bonus. When they lose, we lose. They don't individually repay us for our money that they lost, we lose money and they keep on doing what it is that they do.
Well yesterday the good folks of Iceland went on credit/debt strike. They didn't pay their bills on time. Supposedly 80% of the good citizens did not send in their house payments, their car payments, and their visa card payments just to show the banks they are mad. Now being how they are fiscally responsible they are going to send in their payments on the 15th. I'm sure there is only so much social unrest you can have in Iceland.
Iceland is small enough that you could have a nation wide boycott and get mass participation. It would also help that despite the evil doings of the banks 99% of Icelanders are current on paying bills.
We couldn't do this in America where the financial crisis has created a situation where 25% of all Americans are already in mortgage or credit default.
I heard on the national news for the first time someone who was a rather high ranking official stating that the true unemployment is probably closer to 20% and not the 13% the government touts. In reality if you take out all those on various types of unemployment assistance we are closer to 30% unemployed. This is greater unemployment than we had in the Great Depression.
What does this have to do with your mortgage crisis? Nothing other than slight comfort that this is a global problem that no one is solving.
We recently sent out client packages for you to send to your lender and I am now encouraging borrowers to contact their lenders in hopes of getting mortgage relief. For many of you this was an activity in frustration as you hit that circular wall that goes around and around with no results. Although I did get a dozen sympathy calls from clients who cant imagine that we deal with that all day long.
Lenders are getting more organized. This is both good and bad. Their organization is resulting in more modifications being granted. The bad news is that it is resulting in more loan modifications being denied. And Lenders are getting more organized in what they are looking for and defining rules as to why they will grant modifications and why they won't.
It used to be that they looked at loans in mass and just figured out work out plans as completed packages hit their door steps.
Now they are categorizing loans in to type of loan, FHA-VA-Conv. Kinds of Loans Fixed, adjustable, Pay options, Interest only and crazy hybrids. Next is to determine if the loan is held in house or in the outhouse by private investors. And when I say the outhouse I mean the outhouse.
Loans held by private investors being serviced by the bank are doomed as the investor generally does not want to lose money by modifying the loan. The good news is many banks are figuring out how to repackage these loans and provide investors an out to trade the non-performing loans for something else and then allow for modification.
Bad news is that it is almost impossible to determine who your loan is held by. In no instances have I talked to a lender who has been able to tell me who held the mortgage. Or under what terms they held it. The two big benchmarks being recourse and non-recourse having to do with fault and who pays what in case of nonpayment of the loan debt.
Where does all of this leave us? Well it seems that Washington is tackling the Health Care crisis, a national ban on texting and driving and securing the Olympics in Chicago.
It appears that the housing crisis is off the table, the automotive crisis is off the table, unemployment is off the table, Iran is off the table and Washington is in the HOV express lanes passing exits at triple digits speeds and talking about the next upcoming exit and blowing past it and onto the next crisis.
Where does that leave us? Trench warfare. Trying to solve everyday problems in a society and industry that does not want to be solved.
The banks only want to foreclose on 12% of the homes at a time. The FDIC has a problem with banks that are in distress from to many non-performing mortgages. There is even talk that the FDIC may reestablish something like the RTC - google it - and see how it brought Texas to its knees in the 80's.
Meanwhile there is no broad sweeping relief that should have been offered two years ago to solve this crisis.
It's a old fashioned donnybrook -google it also - where we send in paper work update files and hope to find a slot that you fit in to created by new programs that your lender is creating at a snails pace to solve this crisis.
See they can't solve it too quickly because to do so would result in every bank and mortgage company becoming insolvent overnight.
If your looking for fast mortgage relief it aint going to happen.
Mean while you have sleepless nights and days where you can't concentrate at work for fear of losing your home.
You won't lose your home if you keep us informed of what is happening. And yes for some of you that may mean filing bankruptcy.
This week's shocker. Bank of America actually wanted a letter from a client's employer telling them that he would have employment for the next three years. Mean while the president of Bank of America can't even guarantee that - he is being replaced.
What do you do with that? This modification is based on a letter saying you will have a job for three years. Who knows?
When we ask for non-stop paper work and new pay stubs and updated financials and more utility bills it's not because we are bored, it's because it is the process.
If we ask you to send in stuff or call your lender it's not because we want to torment you. Most likely we are getting feed back from your lender that is the course that will most likely produce results.
The modification specialists that we deal with are not the mean uninformed customer service reps that you hit with the 800 number. They genuinely care and are often frustrated with the lack of progress and want to help. But like us their hands are tied to programs that we all have to fit into in order to get a successful modification.
We just keep trying because we all know what happens if we don't.
