Bank Delays Hinder House Repo Prevention Efforts

Many troubled homeowners who pinned their hopes on the Obama Administration’s loan modification program may be in for some disappointments as bank delays are jeopardizing the goal of the initiative to stave off the number of house repo cases and help about 9 million borrowers who are at risk of foreclosures.

For example, a homeowner was told by his mortgage lender last March that he is eligible for the federal home loan modification program that would reduce his monthly payments into affordable terms, make his account current and allow him to remain in his distressed property.

But that was the last time he heard from his bank until it contacted him last month and informed him that his foreclosed home would be sold sometime August. He did not receive any documentation informing him that his mortgage was passed by his original lender to a second and then a third bank.

This is a common experience among a growing number of troubled homeowners as banks are swamped with the volume of loan restructuring requests. However, they pointed out that banks were unprepared for the volume of loan modification requests that they received since the inception of the federal program.

According to industry experts, banks want to help distressed homeowners avoid foreclosures and remain in their houses but could not keep up with the load of modification requests, creating a huge backlog and leaving many homeowners unable to save their properties from foreclosures.

Bank delays are also causing a problem to homeowners who are trying to sell their distressed properties at short sales, meaning for less than the amount of their unpaid mortgage. Some of them have found buyers for their homes but their problem was, especially to those who took out a second loan, that holders of their second mortgages refused offers of loan payoffs, thus causing undue delays in the sale deals.

According to industry analysts, bank delays are indications that banking institutions are overwhelmed by the load of loan modification requests. They said that time is of the essence in any loan modification case.

Once a notice of foreclosure has been issued, the proceeding starts right away. And when troubled homeowners start the long and tedious process of loan modification, another timetable is created. They said that the trick is for homeowners not to let the foreclosure process run its full course before the mortgage renegotiation procedure is done.

Comments are closed.

Sponsored Links:

Related Posts:

• Backlogs, Delays Hamper Program to Reduce Bank REO Properties
• Study Modification Not Enough to Stop House Repossession
• Freddie Uses YouTube for Government Repo Prevention Program
• Loan Modification Myths Dispelled for Homeowners Facing Foreclosure
• Relief Program to Avoid Repo Homes Listings Slow to Get Off