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Wednesday, April 20, 2011

Where's The Beef? That About Sums It Up!

We have all heard how the mortgage lenders have dealt the American homeowner a bad hand, and how the people, thanks to the U.S. government, has dealt the banks an even better "return" with the various stimulus plans and the so-called "Troubled Asset Relief Program(s)." However, has anyone studied what's happened, or been the least bit weary of the ongoing shenanigans of these financial institutions and their chieftains? For that matter, is anyone up at arms at the way these institutions were doled out billions of dollars as a form of rescue, only to later discover that large portions of these tax-payer funds wound up paying the culprits million dollar bonuses, and in other cases, used as interest-free money to gobble up many of the smaller failing banks -- does a "blue bank" (hint, CHASE), come to mind? Where Is The Beef?

What is most disheartening in the bigger scheme of things is that the average homeowner who bought or refinanced a house within the last six years or so is still struggling to make ends meet, or to keep their finances in some sensible semblance. It is a challenge for the administration to "fix" this bigger mess, but the mess will continue while the people on the front-line, e.g., the homeowners, are given their own "TARP," and this ought not be something to benefit the investors (again), as we saw what that did with the mortgage lenders -- nothing that benefited the homeowners, as demonstrated by the ever increasing numbers of notices of default and the looming "shadow inventory" of foreclosed houses stock-piled by the lenders who have foreclosed on hundreds of thousands of delinquent homeowners.

There have been attempts by the administration with programs such as HOPE; HAMP and HAFA, but these are not all that they purport to be. The average homeowner who bought or refinanced their homes in the "troubled" times, did so under questionably liberal conditions, e.g., "stated income loans," "NINJA programs," "NINA options," and other such creative financing products many lenders were conjuring up to get dubiously eligible prospective buyers to "qualify" for the loan, (the guidelines of these types of programs allowed a borrower to pick a number as their income, and little was done by the lenders to confirm these statements.

With that as the under current of any effort to "fix" this bigger problem, any legitimate process to help such creatively processed loan applications is bound to result in a dismal failure. And so it is. The efforts behind the well-meaning “rescue” programs have been lackluster at best. Many homeowners, who are now facing the final stages of the foreclosure process, didn't get there without struggling to keep their house -- they called their lenders and received very little help or orientation. Worse, some where even told, "unless you're behind on your payments, we cannot help you with a "modification" attempt." they called agencies and got similar results -- "you don't qualify,” or were forced to seek "private" help through some of the many agencies that popped up out of nowhere, it seems, advertising plans to help stop foreclosure and modify their existing home loan, in some cases offering "forensic audits" promising to bring the 'bad' lender to their knees, resulting in a favorable modification by force, only to discover that these efforts resulted in the same outcome, only in this case, with the added cost of the thousands of dollars to get there.

Nothing about this newly contrived process of rescues or foreclosure alternatives has resulted in happy homeowners, or for that matter, happy investors (those who bought the loans on the secondary market), all because it is a lose-lose proposition. The Investor has to give up the profit incentives they expected, the homeowner has to commit to another version of their already bad loan, i.e., a longer term, 40 years, on a house that probably isn't going to appreciate enough to make sense (as an investment, that is).

All that aside, without much hope in the horizon for a true fix, this roller coaster still begs the questions, where is the beef, if for nothing else than to clarify why the lenders are still getting incentives and a velvet-glove treatment while refusing to help the earnest homeowners who are just trying to get some help in keeping their homes with an affordable payment. And you have to wonder about the logic of having the lender "forgive" debt under a plan to sell a house "short" or worse, foreclose the house and then sell it for less than the original loan balance.

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