Foreclosure Victims Desperate For Help Despite The Hype

July 10th, 2008

McClamy is one of the many. He has a family of ten including grandchildren and is bewildered in a cruel world. Running from pillar to post he is finding it difficult to get his house loan modified so that he can continue to stay in the house that has been his home for many years.

When his ARM was about to jump form $1,200 per month to $4,100 he contacted his lender – Countrywide. The latter replied that help could not be given because he had not fallen behind in payments as yet. Strangely at one point, seven months ago, he had actually fallen behind and yet the staffs of Countrywide made him run from one table to another without result. When contacted regarding this particular case, Countrywide was non-committal.

Some of the counseling agencies working with house owners under threat from foreclosures (42 groups) made a survey. According to their findings, lenders are not consistent in modifying loans that will benefit the borrower for a long term by changing interest rates and time span. The actual number of changes effected by the lenders is dismal and the same as what it was a couple of months previously. Foreclosures were common for about 68.4% of those surveyed. The important point is write-downs – but these are not happening. Many of the borrowers find that their property is worth less than the loan amount. This makes refinancing impossible. In these cases it is a must for lenders to slash the principal amount. Only 30% of the respondents said that the lenders are seriously doing anything to help borrowers faced with impossible rate increases.

The pivotal point is that these loans should not have been contracted in the first place. Most of the agencies reported that majority of their clients had been burdened with loans that were unaffordable at the time they inked the papers. The mortgage industry targeted immigrants in fraud deals. About 60% of those surveyed were not conversant with English. The loans were sold in native tongues but the formal papers were all in English.

The worst victims of the foreclosure victims are the renters who pay their rents regularly only to find out that the house has been foreclosed and they have to vacate the premises. They hang in midair!