HAMP Loan Modifications – Preventing Foreclosures, Or Causing Them?

As I once heard brilliant financial guru Steve Forbes say (paraphrase) “. . . we had a chance to fix the mortgage crisis back in ’07;  if we had just let it crash, it would have been painful, but we would have recovered in 6 months.”  A free economy tends to correct itself, but it’s just not the nature of government(s) to leave things alone.  That’s why we have to endure this mess for years instead of months, and why we have new government programs every time another one fails.  Whatever it takes to prevent economy from it’s natural course: stretch the band, kick the can down the road, etc.

Since 2008, when foreclosures finally got the nation’s attention, congress and the administration has been trying everything they can think of to keep the economy off its inevitable course.  So every few months we get another program:  TARP, Cash-For-Clunkers, HAFA, etc.  Not only are none of these programs working, they seem to be making the problem worse, and like all government programs are easy targets for fraud.

It gets even more frightening when you can’t tell if the fraud is intentional.  Case in point is HAMP, the Home Affordable Modification Program.  The evidence is pretty clear that one way or another, most loan mods fail.  So along comes the government (again) with another program trying to revive a dead animal.  Is it intended to assist borrowers, or abuse them?

“What people entering the HAMP modification process don’t understand, until they are out on the street, is that it wasn’t designed to limit foreclosures; it was intended to expedite them”  (Geroge W. Mantor, RISMedia 8/17/2010).

Sound incredible?  Check out these two links:

(1)  More And Better Predatory Loan Servicing Fraud.

(2)  Are Loan Modifications Causing Foreclosures?

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Get The Right Home Loan First

This is the first step in shopping for a home, and maybe the most important. If you have the right loan, it will save you untold frustration after you have your offer accepted.  If you wait until after you’re in contract, there’s too much pressure and not enough time to make a thoughtful choice.

I just finished reading this article in the LA Times, recently summarized by the California Association of Realtors:

“After shopping for a home, tired buyers often make poor mortgage choices” http://www.latimes.com/business/la-fi-lew-20100606,0,1809394.story

This is so true.  Not all loans are equal, neither are they always what they seem. You should question everything, and everyone, relentlessly, and take your time. You would do as much if you were buying a car.  When you buy a home, you’re really buying a loan.  Do your homework.  Choose your loan carefully, and choose your lender carefully.

Mortgage Loan Fraud Assessment based upon Susp...
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Talk to more than one lender.  Ask them to help you figure out what you can afford, and for the two best loans they recommend for your situation.  If you get the same answer from two or more lenders, then you’re getting close.  Again, question everything.  Understand your loan completely. Avoid surprise and frustration.

Finally, work with a lender that you resonate with, one that is crystal clear and easy to understand.  This is important, too. Most stressful moments in a transaction come in the last few days before close of escrow, and my experience is that these moments almost always things that were communicated poorly, or not at all.  You don’t want to find out at the last minute that you need another $10K for mortgage insurance, or that your rate is actually 5.375 instead of 5, or that your origination fee is 4% instead of 1.5%.  You need to be able to communicate clearly with your lender during escrow.

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