Many homeowners in Orange County and other areas of the country are seeking loan modifications for their mortgages as a result of credit challenges in the banking industry. Some have succeeded; some have succeeded only to see themselves back in negotiations with their banks; others have decided to list their homes and “short sale” the property; still others have had the properties enter foreclosure.
As we have said and continue to tell our clients, each person’s circumstance and ultimate decision in regards to their mortgage and their home is unique; each person must make an individual decision.
For those that have been exploring the loan modification route, there is some interesting news released that may at least shed some light on one of the reasons that your lender is not eager to cooperate with your requests.
The initial charge was against Indymac Bank and the sale of their assets by the FDIC to OneWest Bank. There are video claims that there is little incentive by OneWest Bank to work with homeowners on their loan modifications because there is more incentive (and more money to be made) by having the property go into a short sale or foreclosure.
The FDIC has issued a statement and press releases in regards to the claims made on the video denying much, but not all, of the claims of the video.
In an article in the New York Times the FDIC disputes the accusations that tax payers will be the ones footing the bill for future losses by the bank through the loss-share agreement that was drawn between the FDIC and OneWest Bank. In that article it states:
“Here are the facts: OneWest has not been paid one penny by the F.D.I.C. in loss-share claims,” Mr. Gray said in his statement. “The loss-share agreement is limited to 7 percent of the total assets that OneWest services, and OneWest must first take more than $2.5 billion in losses before it can make a loss-share claim on owned assets.”
Under the terms of the sale, OneWest must negotiate loan modifications with homeowners if the recovery on the loan is determined to be higher than the recovery from a short sale or foreclosure. And loss-share coverage “cannot be factored” into that determination, the F.D.I.C. said. But OneWest has, in fact, been accused in some cases of doing all it can to avoid modifications, which involve reducing the interest rate, extending the loan term or forgiving part of the principal amount owed.
A judge in Riverhead, N.Y., went so far as to cancel a Long Island couple’s loan obligation in November, saying OneWest, which was the loan servicer, had failed to cooperate in efforts to avoid foreclosure and calling the bank’s actions “harsh, repugnant, shocking and repulsive.”
So tell me what you think…which avenue do you think is the most viable for the banks to clear their books of poor quality and poor performing loans, or bank owned property?
In the spirit that there is opportunity amidst the rubble of challenge, could this information be used in a homeowner’s favor…allowing them to move up, or down, into a home that they have had their eye on – or an area that they have always wanted to own and live but were not able to afford previously?
Do you think that it would be better to attempt a short sale of an underwater home, moving forward into another property, or to try to modify an existing loan and stay in your current property until the market improves and values increase?
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