Who's to Blame for the Mortgage Mess?

• Report this Comment On December 15, 2009, at 2:19 PM, mainelegal wrote:

  51 out of 71, having made the payments, don't meet the "required paperwork" requirements.

  Does this seem at all bureaucratic ?

  It seems certain that if one tenth of the energy devoted to rounding up or dispensing with paperwork that occurred when the loans were created was available to finalize these files now, this little fact would be far less than the reason why a majority of all loan restructures fail.

  Perhaps these lenders should have their access to Fannie Mae and Freddie Mac restricted until they perform a little better. So far they have continued to be very poor stewards of the responsibilities they voluntarily undertook.

• Report this Comment On December 15, 2009, at 2:52 PM, Fool wrote:

  Unfortunately, 1/10 of the 240 homes in my neighborhood are under foreclosure action. Many of which have been empty for well over a year. I'm one of the lucky few who can still realize a nice profit if push comes to shove and I have to sell, but the majority of the neighbors I have spoken with are upside down. I see no light at the end of the cul-de-sac! Watch how the liberal media continue to hawk the improving market with no regard to the facts of this article.

• Report this Comment On December 15, 2009, at 3:39 PM, FundInsider wrote:

  I agree with mainlegal, this is the fault of the banks, not homeowners. Banks, and the gov, are just ridiculous when it comes to paper work that the average person can not understand. To me, if 71 % make the payments, that's a HUGE SUCCESS, and it's being spoiled by onerous paperwork that banks require.

  Maybe H&R Block should get into the business of filling out mortgage modification requests, not much different to the average person that doing tax returns :-)

• Report this Comment On December 15, 2009, at 3:50 PM, questioner5000 wrote:

  mainelegal;

  Note that the documentation required of the borrowers is documentation REQUIRED BY THE U.S. GOVERNMENT. These are not forms/requirements dreamed up by the banks, (though, had the banks required the same documentation when making the loans, much of the mortage activity wouldn't have occurred in the first place)!.

  Why have so few "trial modifications" been converted? Well, in part, many applied for trial modifications;

  - - - were to borrowers who can actually afford to pay their mortgages, but, because they qualified simply because they were "underwater" saw the modification process simply as a way to get lower rates and terms for a few months at least. (Once their TRUE financial situation is documented, they would no longer qualify for assistance.)

  - - - were to borrowers who were simply "investors", and so wouldn't ultimately qualify for permanent modification.

  - - - were to borrowers who never should have been granted a loan in the first place, and are in such bad shape that they know that the trial modification is little more than a way to stave off foreclosure for another 6 months

  - - - were to borrowers who falsified their original applications, (i.e., other assets, other debts, income levels, etc.), and so are simply glad to get more time in their homes, before getting removedbecause they were available.

  - - - were to borrowers who are simply too damn lazy to gather all of the Government-required documentation.

  I know that the current fad is to claim that the public was totally innocent/naive/stupid, and has no blame in the current mess, and that it is solely the fault of the banks for stealing our "good times" and birthright to "easy, no-sweat" credit, but it's self delusion.

  As Pogo said, "We have met the enemy, and it is US!

• Report this Comment On December 15, 2009, at 4:00 PM, TMFHousel wrote:

  "Banks, and the gov, are just ridiculous when it comes to paper work that the average person can not understand."

  I get your point, but if you don't understand how to document your income, you shouldn't be buying a house.

• Report this Comment On December 15, 2009, at 4:41 PM, Usurped wrote:

  Maybe it's just your typical TaxEaters who seem to need even a TaxPayer paid butt wiper to make it through the day.

  You TaxEaters are too much to stand. The data is all around showing that these TaxEaters shouldn't have been given a loan to start, but the Federal Gov't forced it upon the Lenders (Community Reinvestment Act) and continue to blame banks for what the Gov't has wrought on the not so free Free Enterprise. Gov't education makes for good voting TaxEaters.

• Report this Comment On December 15, 2009, at 6:24 PM, Fool wrote:

  It's idiotic that you cannot refinance your existing loan that is at a higher rate for a lower rate loan because you can't qualify. Don't you qualify more for the lower rate loan and aren't your chances of making your payments much greater with the lower rate loan??????

• Report this Comment On December 15, 2009, at 10:28 PM, questioner5000 wrote:

  But Fool;

  In terms of simple "refinancing", there are reasons why a borrower may not be able to refinance;

  ----Their employment status of the owners may have changed since the original loan was made

  ----The appaised value of their home may have dropped substantially since the original loan was approved, thus making the collateral less valuable

  ----The owners credit score may have deteriorated due to a whole host of other factors.

  If you're talking about the Government's modification program, there are a host of reasons why the program might not be applicable;

  ---- The borrowers are able to afford their current mortgage and are not able to prove "hardship

  ---- The borrowers are so deeply in trouble that even modification isn't seen as a permanent solution

  ---- the borrowers original loan was based on fraudulent input, or the circumstances surrounding the loan make loan modification iumpossible - - i.e., investment properties rather than primary residences, etc.

  ---- the borrowers are unable/unwilling to complete the required paperwork

Add your comment.