Inefficiency of Banks Modifying Loans

[Gerry Clinchy]

http://www.nytimes.com/2009/06/29/bu...html?th&emc=th

What a nightmare! Evidently nobody prepared for actually implementing the funds for helping out those mortgages in arrears.

I note a couple of things.

The big mortgages make the headlines. What about the many smaller mortgages that are having the same paperwork problems?

It's been several months & these banks are still floundering around without a sound procedure in place. Our tax money is going to waste.

Short sales can take months to go to closing ... thus increasing the losses for these banks because the cash flow that would result from getting at least partial payment of the loans is being delayed.

Failing to plan is equal to planning to fail. All this money spent with so little thought put into how to effectively implement its use.

Every new administration enjoys an initial "honeymoon" with the media and the populace. I believe this is why the administration is trying to push through so much legislation on so many fronts so quickly. It looks like this "honeymoon" will not last much longer.

[Raymond Little]

We can only hope there will be Change!

[Gerry Clinchy]

It really seems like the banks should be using some of their billions to hire more people to process their paperwork to get relief to struggling homeowners.

It appears that the banks are trying to keep their belts tight (not enough staff to handle the volume) so they can give back the bailout $ that has strings attached that are unappealing to them. As a result, they are shooting themselves in the foot as they will take longer to sell the homes of struggling borrowers, and will ultimately get lower prices for the homes.

This stuff reads like a 3 Stooges movie:

From Real Law Central:

Of all the short sales initiated, not many are actually completed, said South Carolina-based real estate broker Michael Costello. He estimated that in the past seven months, for every short sale that closed in the Myrtle Beach counties of Horry and Georgetown, there were five contracts written on it. That means a majority are never completed.

[Gerry Clinchy]

cont'd

[QUOTE]
Problems arise from a number of different origins, he said. First, the real estate agent doesn’t always collect the proper “hardship package” ─ the information proving the homeowner has financial hardship ─ which causes a delay with the lender. Also, Costello believes lenders are bogged down with more cases than they can handle.
“They all have eight to 10 times the number of cases they can handle effectively,” he said.
Costello mentioned a case where a possible seller made an offer on a house involved in a short sale. The listing price was $250,000; they offered $220,000. After two months of waiting, the clients wanted confirmation that the bank saw their contract. They increased the bid to make it a full-price offer, on the condition they hear back from the bank within 10 days.
“The response from the listing agent was that the bank received the addendum with the offer of the additional $30,000 but they will not get back to the client for another month,” Costello said. “In the meantime, if another contract comes in that is $1 more than their contract, the clients have wasted three to four months and they still will not get the property.”

Problems with short sales have been reported in the media.

[Gerry Clinchy]

cont'd

[QUOTE]