Preventing Foreclosures

When it comes to preventing foreclosures and helping homeowner’s keep their properties, a little bit of common sense and compassion needs to be injected into the real estate mortgage industry.

Let’s take Countrywide Home Mortgage and Indymac Bank. Giants in the industry, who were saved from demise themselves last year, have it in their control to save homeowners from going under.
I’m a real estate professional and that makes for interesting conversation at dinner parties these days. People are talking about the difficulty they have encountered when trying to modify their mortgages to save their good credit rating.

I decided to see what is happening first hand. I called Countrywide and Indymac to find out what their policies are in regards to helping struggling homeowners, who are current, stay afloat. Both banks have the following plan: Don’t pay your mortgage for three months then they’ll talk to you. Until then, they won’t work with you, period. Indymac does have an online form that can be completed to put you on a waiting list, just in case you default.

Here’s the problem. Honest, hardworking mortgagors, who are now victims of the recession, are trying to make good. The inability of these banks to effectively address this large demographic, will only lead to more foreclosures and further deterioration of the real estate market and will ultimately further impact the failed economy.

I may be overly dramatic here, but with all the bailouts happening, what about the government directing these banks to prevent loans from even starting the foreclosure process and be proactive, rather than chasing fires as homeowners become delinquent. With the average cost of a foreclosure around $50,000 per bank, it just makes good business to work with loan modification. When a consumer’s credit is already negatively impacted, their level of motivation to work with a bank and prevent foreclosure is dramatically different than when they have something to save.