Foreclosures Continue at Banks that Said No More

Posted by: Chris Palmeri on December 3, 2008

I’ve been getting emails from readers who say they are still receiving foreclosures notices, even from banks that have said they would halt foreclosures until the New Year.

“Foreclosure is scary as hell,” writes one reader who lives in Washington State and says he started getting notices in mid-November. “They send strange men to your house after dark on Saturday night to hand-deliver copies of documents from a metal lockbox. Every day brings more certified mail. The mailman has to knock and wait for us to sign things. Three different certified copies of everything, one to “occupant” and one to my wife and I. It’s really bad, and is affecting my physical health and my family’s mental health. Another lady came and surveyed our house and then knocked on the door to hand us a slip of paper from the bank. She warned us that foreclosure was impending. We’re definitely not having a happy holidays. I didn’t know it but foreclosure seems to involve scaring people and embarrassing them publicly.”

Here’s an email from another reader, who says her loan is also from JP Morgan Chase, which vowed on Halloween to halt foreclosures for 90 days. “They have not stopped the foreclosure process on my home. I have to pay $4,800 on December 25, 2008, Christmas. What a country we live. Sad, so sad.”

Tom Kelly, a spokesman for Chase, says that in some cases loans are owned by another lender and Chase is just collecting payments. In those situations, Chase has to proceed down the foreclosure route. The Washington State reader, for example, had a loan with Washington Mutual, which was bought by Chase in September. But the loan is owned now by Freddie Mac, Kelly says.

Brad German, a spokesman for Freddie Mac, says that while foreclosure filings may be proceeding the company hopes to have final plans in place by Dec. 15 that will allow Freddie Mac to quickly modify loans to more affordable rates to keep borrowers in their homes.

Reader Comments

mike mcc

December 3, 2008 12:49 PM

Here is the cure. The gov't should back all new mortgages for owner occupied homes. The current lien holder/s should simply mail out new loan docs to every mortgage holder (whether delinquent or not), with up to $100,000 reduction in mortgage owed, and a fixed interest rate of 3.5% for 5 years. Anyone who signs one, has a credit ding, which means they cannot obtain a new mortgage within 5 years, without paying the forgiven $100,000.

And, further, the requirement would be that the home remain owner-occupied, unless the owner could prove certain duress, such as death, divorce or job transfer out of area, or of course a job loss.

To keep someone 5 years in one home would help teach stability to those who have perhaps never known it.

Snoz

December 4, 2008 3:32 AM

How has a once great nation fallen so fast, suffered so much indignity, and impoverished itself in less than 20 years? Did our founding fathers knowingly created this fiasco at the ratification of the US Constitution? Or is our current economic calamity the result of the changes in the American people and as well as their leaders changing the Constitution? While the ultimate answer to these questions will be determined by history, the contemporary answer is that the American people have changed their core value. Forty years ago, JFK challenged the American people in his famous speech: Ask not what your Country can do for you but what you can do for your Country. Today, American from all walks of life, from corporations large and small to homeowners to small business owners are demanding America bailing them out. In unison voices they sound all the same: give me my free money. Once upon a time, America stood taller than the rest of the world because its people champion liberty and truth above all else. Today, the massive bankruptcy and collapse of America's mightiest financial institutions are evidence of a nation's people whose core value has gone astray. Like fallen Rome, the decay of America started within the hearts and minds of its people long ago. When one of the core values of the current generation of American is "bail me out first," the reason for our economic collapse becomes apparent. With so many Americans fighting for themselves instead of for Country, how can America survive? For the majority of American during the last forty years, JFK's message fell on deaf ears.

JMB

December 5, 2008 3:31 PM

I am program Director for a HUD certified counseling agency and have been performing loss mitigation/foreclosure prevention counseling for a good number of years. What I have noticed in the last 6-10 months is that it is getting harder to develop a "workout plan" not easier. The servicers cannot make decisions on loan modifications, they are overwhelmed with requests for modifications, they lose documents, and fax numbers don't work. Many people who are trying to do loan mod's with their servicer on their own don't know some of the finer nuances of dealing with them like making sure you have a surplus in your houshold expenses, putting your loan number and property address on every single page you send them and calling, calling, calling every day to make sure your paperwork was received. Once they receive your paperwork the servicer has to submit it to the "investor" for a review. In many cases these reviews take 30-45 days to complete. The foreclosure process does not stop while this review is going on! Also...the investors have rules about when the servicer needs to turn the loan over to an attorney to start foreclosure proceedings, so even if you are working with them they can still send you to legal which then adds $3,000 -$7,000 in attorney fees to the amount you now owe. Even if the only thing the attorney has done is send a demand letter they still bill you for the entire amount the investor agreed to pay them. Some system!

Andy

December 6, 2008 8:28 AM

I definitely think there needs to be more pain to these borrowers that are defaulting. You should ask why the borrower has to come up with $4,800 on December 25...probably because they have not made a mortgage payment in months and are now living free in a home.

What is so sad is that is that we live in a country where defaulting borrowers are now anticipating a big bailout for their own personal finances, not that the banks are trying to collect on money they entrusted that the borrowers would pay back.

I think there are many different structures that can be considered but there should be some definitely difficulties put on these borrowers if the loans are restructured and debt is forgiven. Mike brings another potential option.

Denise

December 31, 2008 12:12 PM

I certainly am a victim of predatory lending.I make 40,000 a year and got a home loan for 200,000 in 2007. I got behind when I wrote to my mortgage company and asked what the process would be to escrow in my taxes. Without letting me know I went to town hall to pay taxes and was told I owed nothing only to find out First Franklin paid them and raised my 80-20 loan by 400.00 per month when I was paying an extra 200.00 per month for property taxes. My first mortgage is 6.99 and my second is 11.99. Now someone out there tell me I should be a responsible citizen and not walk away. Being a victim is not in any way fun and staying in a home for 5 years to teach me stability. I have a few words for you.............Stability this............

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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