Housing Recovery Hindered by Mortgage Modification Problems
Banks are either willfully ignoring modification stipulations or being incredibly incompetent in dealing with them, leading to a slowing of a potential housing market rebound.
The U.S. housing market has quite a few things going against it, not least of which are the collective psychological toll the bursting bubble has caused, massive U.S. debt and a growing number of foreclosures. There is, however, yet another feather in the quiver of the forces working against a full-on housing recovery, and that is the banks themselves. Charged by the federal government with working out loan modifications, banks are largely failing to do so. Whether this is intentional or not is a matter of opinion.
One woman who has been trying to get her loan modified for almost four years has been denied many times by her loan servicer, Bank of America. She has received quite a bit of documentation from the bank, some of it contradictory and some of it based on obviously faulty financial models and calculations. If one didn’t know better, one would absolutely believe that the bank is trying not to modify the loan and is stalling as long as possible to come to terms with modification requirements.
Notes the victim in this situation, "They gave you a funky loan in the first place, and now they’re refusing to work with people to get it worked out. It just keeps you upset all the time." Susan Wachter, a housing expert with the Wharton School of the University of Pennsylvania, notes, "It delays resolution of the problem of defaulting loans and it is adding uncertainty to the market." Uncertainty, of course, is the last thing the housing market needs. And, while the banks themselves would benefit from a housing market turnaround, they seem to be everyone’s worst enemy – including their own – as this situation unfolds.
By Buzzle Staff and Agencies