This story may be of no real surprise for those you study the reasons for the restrictive hold the banks appear to have on the evident lack of inventory of homes for sale in the current market place. But I wanted to share a recent discussion I had with a Bank of America representative yesterday with you anyway.
I'm interested in what your opinion is on the recent "trial period loan modifications" that were sent out to homeowners beginning in June of this year. For those homeowners who received such an offer seemingly "out of the blue" what did you decide to do?
My personal experience with many homeowners has been an equal share of those who chose to participate and those who thought differently. These "trial offers" came to some at a time when they were at their wits end in attempting to negotiate an effective loan modification to no avail. Some received these "trial forbearance agreements" just days after they received their formal "denial" letters. So what's up?
It was my speculation that President Obama's Homeowner Affordability and Stability Plan which outlines guidance to Fannie Mae servicers for adoption and implementation of the Home Affordable Modification Program (HAMP) for Fannie Mae loans may be a hollow attempt to achieve its main objective - enable homeowners to remain in their homes and be able to afford to.
The mere aspect that the plan's directive mandated all Fannie Mae-approved servicers to participate in the program for all eligible Fannie Mae portfolio mortgage loans and pool mortgage loans whether or not the borrower would ultimately qualify for a long term loan modification upon completion of the "trial period" made me uneasy.
In other words, the government was ordering the lenders to offer "something" to the homeowner facing foreclosure to prove that they attempted to help them. That's all. These "trial period plans" were a means for the lenders to collect money from homeowners whether or not they would be eligible for more beyond the end of the trial period.
The most recent stats on the success of the Obama plan show that a mere 9% of eligible borrowers have seen any change in their mortgage terms or payment. Disgusting.
What I heard yesterday from the Bank of America representative was that beginning in September 2009, the first month after the initial "trial period loan modifications" were introduced coupled by the lift of the moratorium in foreclosure proceedings is that the banks are going to unload their held inventory of foreclosed properties into the market place like never before.
This news raises many concerns for homeowners everywhere as an acute rise in available inventory could outnumber current demand causing another monumental decline in home prices. Let's hope that the lenders are cognizant of their actions during such a volatile time in our economic history. Basic measured and proven results based on the rules of cause and effect and supply and demand remain constant. It is the variables applied by the lending institutions that cause us so much fear and uncertainty. We shall see.
Diane Wheatley, Broker