Two news stories came across my desk this morning. Seemingly unrelated at first glance, but are they?
From the Washington Post’s piece, Attorneys general try to rein in lenders’ shabby behavior on modifications: Borrowers with on-time payment histories who sought loan modifications frequently were told they needed to stop payments for two to three months before they would be eligible to even discuss possible changes to their loan terms. When they applied for modifications, they were sent foreclosure notices because they were in default.
Servicers pyramided late fees and other penalties, swelling borrowers’ debts to the point where they were so large that foreclosure became inevitable.
From HousingWire.com’s story, Nevada bill to crack down on willful foreclosure damage: A bill introduced to the Nevada State Assembly would give authorities the ability to charge borrowers with a felony for willfully damaging a home during the foreclosure process.
MikeZ
In June 2010, Fannie Mae said it was sifting through loan data to hold strategic defaulters accountable. It would then charge borrowers with the deficiency of the REO sale, which includes any repairs to damaged homes.
That threat was a year ago, how many have been charged? Zero?
Except for the rare cases of idiots self-documenting their crimes and then uploading the video evidence to YouTube, it’s going to be impossible to prove that the homeowner caused the damage.
Salter
Given the swiftness with which a monolith like Fannie Mae acts, its first actions against strategic defaulting borrowers will be in 2016. Maybe. By which point the event, and the evidence, will be years and years in the past.
It will never happen.
Phil Hoover
I am generally opposed to governmental intrusion into free markets, but it seems that the solution to this problem is for regulation requiring servicers to have a single point of contact and not file foreclosure action until all other remedies have been exhausted.
Many of us in real estate have experienced a servicer saying they won’t discuss loan modification unless the owner is delinquent, only to foreclose BECAUSE they were delinquent.
And, they wonder why they have so many foreclosures?