The discussion in our last post centered around the impact mortgage modification and loan restructuring applications are having on both the Service Provider/Banks, and on the Homeowner applicant as well.
As the time for foreclosure sale draws nearer homeowners are becoming increasingly concerned that their applications for mortgage modification will not be processed by their Banks before that time expires. At the same time the Banks, short staffed as they are because of recent layoffs, are also concerned that if they are unable to approve these applications in time, they will end up landlording vacant,vandalized and deteriorating buildings.
Some banks are simply overwhelmed and are failing at this. Some homeowners just do not qualify for mortgage modification or loan restructuring, even if they were lucky to get their applications processed prior to the foreclosure deadline. The result - more foreclosed properties entering a market already saturated with homes declining in value.
According to a report today by NPR.org "U.S. home prices fell an average of 19 percent in January from an year earlier....." Foreclosures, said the report "...and a hefty backlog of unsold houses continued to glut the market..." This situation may well be exacerbated by the actions of some Loan Servicers/Banks, who according to a report yesterday by the New York Times, are walking away "themselves", my quote, "on foreclosures".
The Times report, authored by Susan Saulny, quoted Larry Rothenberg, a lawyer for Weltman,Weinberg & Reis as saying "The soft housing market and the vandalism that often occurs when a house sits empty are the two main factors influencing the mortgage holders decisions to walk away."
Not only have homeowners been walking away and abandoning their homes - now the banks are also participating in the act, according to the New York Times report - Is this a good thing for the homeowner? No! They still owe the Banks on the mortgage note - they are still obligated to make payments on the note - they are still hurting... and the Banks? Are they helping...I don't think so... What do you think?
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