I recently went through nine months of trying to get my loan modified ["Why Obama's Housing Rescue Hasn't Prevented Record Foreclosures," usnews.com]. All I asked for was a reduction in the interest rate. Then, after approving the modification, Wells Fargo decided not to give it to me after all! I'm still waiting on the letter that is supposed to tell me why. The modification department personnel didn't even have the decency to call me back after I left several messages over the course of a month. Wouldn't it make more sense to keep me in my home (I have a good job) by just reducing the interest rate than to take my home and sell it for one third of what I purchased it for?
Comment by Carol of NV
It takes an irresponsible lender to create an irresponsible borrower. It does little good to modify someone's mortgage if they no longer have a job. The time for write-downs, as opposed to write-offs, has largely passed. Foreclosure rates aren't coming down anytime soon. Regarding "toxic assets," if it's toxic, it's a liability, not an asset.
Comment by Rich of MO
Anyone who thinks that the government regulating more of this sector will provide for sustained improvement and long-lasting stability is not paying attention. If banks and lending institutions were willing to "bet their dollars" on a government-backed system of support and regulation, then why are the "successful" banks in such a hurry to pay off their bailout money? The free market will weed out the irresponsible; people will be taken advantage of, and people will get hurt; the lenders that "force" through these "bad" loans will be exposed and their prosperity as a business will suffer. Owning homes/property is not a right; it is a privilege, a privilege that most of us believe that you must work very hard to achieve and sustain. Government has as much business in lending regulation as they have in regulating what light bulbs I use in my home.
Comment by Conor of WA
Banks are also contributing to the foreclosure rate. Yes, they grant the loan modification trial period; after that some clients just cannot get a solid commitment nor even written communication from these banks. From personal experience—when I asked where should I go from here? They told me that my file was now in limbo, and I should return to paying the original mortgage premium. All the money I paid during the trial period has not been applied toward the mortgage account but deposited to a special account on which, I am sure, the bank accrues interest. My home is therefore in jeopardy of foreclosure through no fault of mine. My conclusion: Banks are sabotaging the loan modification program.
Comment by F. Wood of NY
I went through the loan modification program with my mortgage company and was denied based on lack of income. On a certain level, I see their point about me having no income as a guarantee of future payments, despite not being behind and living off my savings. Be that as it may, the program needs to allow people without income for a reasonable amount of time to modify their loans. Moreover, the rate of foreclosure will only really slow down once Congress allows homeowners to force banks into lowering the principle owed. In my area of West Atlanta, the landscape is littered with homes that sold for $400K-$600K. Since all of these homes have lost so much of their value, who exactly is going to buy them, and why should a short sell be the only option? Everyone (banks, buyers, sellers, builders, RE agents, et al.) is to blame.
Comment by Jay of GA