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Housing Crisis - Brief Synopsis

While basic understanding of the "book smarts" within the mortgage industry will help you understand specific terminology, loan programs, and features, there is so much more you will need to know in order to make an informed financial decision.

My approach to providing education strives to further your understanding beyond the "book smarts" of the mortgage industry, and learn the valuable "street smarts" that will help you achieve the best possible results, while avoiding the most common pitfalls that non-informed Borrowers and Real Estate Professionals have experienced.

The Mortgage Street Smarts of the Housing Crisis

Housing Crisis - Mortgage Street Smarts

The American Dream of home ownership has become a nightmare for many people across the country.  As property values have decreased, many Homeowners have watched the equity in their homes disappear.  At the same time, Borrowers have felt the financial pinch of rising monthly mortgage payments which have significantly affected their cash flow.  To make matters worse, millions of Americans have lost their jobs, and have been forced to pull money out of their savings and retirement accounts (and/or charge up their credit cards) simply to make ends meet.

In the past, Homeowners have sought help from their local Banks (or Mortgage Companies) in situations like these.  They have become accustomed to receiving debt-consolidation mortgage loans which allow them to pay off their existing debt, free up cash flow, and provide a fresh start towards rebuilding their financial profiles.

Housing Crisis - Mortgage Street Smarts

Unfortunately, during these current turbulent times, we cannot rely on lenient approval guidelines from Banks.  In fact, many Banks have been forced to tighten their underwriting parameters, eliminate loan programs, stop doing mortgage loans, or shut down all together.  The end result is that the people who need these loans the most are no longer able to qualify for them!

Many would argue that approval guidelines should have been stricter all along, which may have prevented our current housing crisis.  While it might be tempting to blame others for our current economic condition, it is crucial that Homeowners pursue solutions at a time like this and take proactive steps to regain control of their finances.  In most cases, time is of the essence when determining what options are available within the context of Loss Mitigation.

Recent developments within the industry have fueled the momentum and incentives for Lenders to modify specific contractual terms of existing mortgage loans (Loan Modifications) or consider allowing the sale of a home that has negative equity (Short Sale). 

Sadly, many opportunistic "professionals" have preyed on the vulnerable Distressed Homeowners once the housing crisis began. These predators literally took the last dollars of fellow humans who were begging for assistance. As a result, the Federal Government passed Senate Bill 94 which essentially put a halt to the Loan Modification industry by preventing anyone in California (including Attorneys) from charging an up-front fee for Loan Modification services.

The average Attorney will not accept a case on a contingency basis for a scenario that is projected to take 9-12 months, involving a frantic client (who is in fear of losing his home due to constant threats from his/her existing lender), with the sole goal of persuading a bureaucratic lending institution to tear up an existing contract and start a new "more convenient" one for the Client/Homeowner/Borrower in question. The compenation that the Attorney could earn for all of this work...$3000 - $4000. From a business prospective, how is the Law Firm supposed to pay their ongoing bills during this 9-12 month period without being paid a single penny (much less show a profit when all is said and done)?

Personally, I find it curious that in the state of California (where people sue each other for some of the most petty reasons), our trusted Government has enacted a bill which essentially prevents their citizens from being able to obtain legal representation in an attempt to save their home. Did the Government prohibit the Banks/Lenders from using Attorneys to represent them against these pesky Borrowers? Of course not.

Housing Crisis - Mortgage Street Smarts

The result (as we are experiencing) is that millions of Distressed Homeowners are giving up. After all, when you are trying desperately to make ends meet financially, how do you find time to sit on hold for 45 minutes waiting for someone at your Bank to answer your call? If it was a one-time "long phone call" that might be sufficient. The reality however is that Distressed Homeowners are expected to make dozens of these long phone calls, while redundantly submitting the same financial information to these Banks again and again.

It is truly amazing how often Loss Mitigation Departments of these Banks lose/misplace so many faxes which are sent in the context of attempting to save someone's home! Even if receipt of the FAX is confirmed, those pages seem to often evaporate into thin air once they are in the file. How convenient! When you suggest scanning/emailing the documents (to allow for cleaner delivery & tracking), each Bank cites a hidden company policy prohibiting such a manner of delivery. Assuming you are among the small percentage of Borrowers who have not given up, and instead continued diligently to get everything in the Lender's hands, you are soon rewarded with the proverbial knock out punch: "Your modification request was denied due to the fact that you do not meet Investor guidelines." When you ask for an elaboration, you get stonewalled. Not only will your Bank fail to tell you what specific guideline prevented your approval, they won't even reveal the name of the Investor!

As a former employee in a Law Firm dedicated to Loss Mitigation Services, I can tell you that the above scenario was far from isolated...instead it was/is the norm. You can expect a continued trend of Foreclosures & Short Sales with Homeowner's "squatting" in these homes until they are escorted out by Law Enforcement.

Although it is not my desire to dwell on the negative trends, I wouldn't be human if I didn't at least acknowledge them. Among the many challenges moving forward for Real Estate & Mortgage Professionals will be to convince these "once bitten, twice shy" people to pursue the American Dream of home ownership again in the future. Hang on tight...this wild ride isn't quite over!

For more information on topics like this, please feel free to visit www.MortgageStreetSmarts.com (an educational resource for Borrowers, Real Estate Agents, and Financial Professionals)

To see if you qualify (and to obtain a current market interest rate quote), click here for a secure online loan application form.

For more information on topics like this, please feel free to visit www.GordonMortgage.com (an educational resource for Borrowers, Real Estate Agents, and Financial Professionals). Educational content provided by:

 

Jason E. Gordon

Branch Manager | Sr. Mortgage Loan Officer

CMPS,  RCS-D, CDPE, CMHS, CMC, NMLS 259027

 

Gordon Mortgage Group - AmeriFirst Financial Inc.

 

Office: 619-200-8031

Email: jgordon@amerifirst.us

www.GordonMortgage.com

 

11260 El Camino Real, Ste. 100, San Diego, CA 92130

 

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To see if you qualify (and to obtain a current market interest rate quote), click here for a secure online loan application form.

 

Gordon Mortgage Group - AmeriFirst Financial

 

Licensed by the Department of Corporations under the California Residential Mortgage Lending Act.

AmeriFirst Financial Inc., 1550 E. McKellips Road, Suite 117, Mesa, AZ 85203 (NMLS #145368) Toll free phone (877) 276-1974. Copyright 2012. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all loan amounts. Other restrictions and limitations may apply. AmeriFirst Financial is required to disclose the following licensing information. Please click here for licensing information. 

 

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Comment balloon 1 commentJason E. Gordon • October 13 2010 10:20PM
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