Break-Up of the Lender/Borrower Marriage Needs Work

Recently, the Obama Administration reported new efforts to spearhead a national drive to help borrowers in trouble to modify their mortgages.  Phyllis Caldwell, the new Chief of the U.S. Department of Treasury’s Homeownership Preservation Office stated "We are encouraged by the pace at which trial modifications are now being made to provide immediate savings to struggling homeowner’s and will lead the campaign to convert the trial modifications to permanent ones."  The treasury secretary’s announcement continued to present the government’s work as a Herculean effort to serve the nation and ensure that all who come forward can use these trusted resources.

But is it really a case of "seek and ye shall find??"

Recent Efforts to Reduce Foreclosures

Let’s look through some of the news articles we’ve been saving in our desk drawers this last year.  Newsday articles going back to February quoted community leaders, housing experts, real estate association presidents, and even Pres. Obama himself, all expressing confidence in these policies. According to many sources, there seem to be opportunities galore to save our homes from foreclosure.  According to sources, the U.S. Treasury "doubled its $200 billion capital commitment to Fannie Mae and Freddie Mac" intending the funds to keep our homeowners in their homes.

Fast forward, 10 months later to the Sunday NY Times article by Gretchen Morgenson.  "After months of playing pretend, the Treasury Department conceded last week that the Home Affordable Modification Program, its plan to aid troubled homeowners by changing the terms of their mortgages, was a dud".

What Went Wrong?

So where did the $75 billion dollars go?  Where did the $200 billion dollars go? Did our neighbors and friends who are desperately need help just decide to forget about it?  Did our citizens forget about the chaos in their families, marriages, businesses and jobs and bury their heads in the sand as their homes and communities fell into foreclosure? Did the money even exist at all?

Ms. Morgenson pointed out the frightening statistics and layed out the dire consequences of this enormous federal failure to solve the problem. And it doesn’t stop there.  As Ms. Morgenson pointed out, "You (also) have to address the second liens."  Many experts agree that the expanded and troubling issue of second mortgages has not even entered the national discussion.

The monetary penalties and sanctions against the servicers are included in the recent Treasury accountability bullet points.  But borrowers seldom demand such action. They don’t seek punishment, embarrassment or penalties against their lenders and servicers. They are desperate for solutions to what they perceive to be a "till death do us part" vow at their mortgage closings.  Our neighbors do not want foreclosures and board-ups and forced short sales.   They want the "Plan B" as called for by Ms. Morgenson.   The federal dollars have been committed; that’s what we are told.  Unfortunately, it is not getting done and is failing despite plenty of submissions for loan modifications.  Maybe it takes the Court decisions of voiding mortgages or other sanctions to make the process for loan modifications seem a more desirable solution for the banks.  This ultimate "divorce" is not what I see and hear.  I see and hear the concerns for settlement and modification, for counseling rather than divorce, and in essence, for these families and neighbors to return to their closing vows.