Anyone that reads this blog knows that I am not a big fan of government intervention in the housing market. Anyone that reads this blog also knows that I am a big fan of honesty and integrity both in one's personal and professional life. Much of what has happened in the mortgage industry and the housing industry stems from a lack of honesty and integrity in the personal and professional lives of Americans. The government's attempt to "save" the housing industry has simply kicked that can farther down the road.
The latest knot in the housing market unraveling is the admission by the top three lenders that there have been flaws in their foreclosure documentation--putting into question the legality of millions of foreclosures. While I would never condone a lender purposely ignoring the laws of the states they operate in nor their own internal system of checks and balances, I also have to ask myself if we, as a country, have really left them much choice.
Should we let lenders off the hook? Absolutely not! Should we continue to hold them accountable for the mistakes that they made? Absolutely! Can we get blood from a stone? Not the last time I checked.
When I read that one Bank of America official signed up to 8,000 foreclosure documents a month, I started to do the math. I timed myself; it takes me eight seconds to sign my name and ten seconds to sign and turn the page to sign the next document. It would take me 22.22 hours to sign 8,000 documents. Just to simply sign her name would take 16% of this official's work-month. The second part of her admission was that she typically didn't read the documents she was signing. If it takes her 16% of her work-month just to sign her name to one of those pieces of paper, how long would it take for her to read the documents that went with each one of those 8,000 foreclosure files? Oh, and by the way, that is probably just a small part of her job description.
As a Realtor, I lean on lenders all the time to process a short sale faster, give me a response on an offer on a foreclosure faster, redo a BPO (Broker's Price Opinion) because it's four months old... Those are all processes that were a very small part of what a lender did each day. Now lenders are not only trying to stay in business by doing what they have always done--originate loans--they are also tackling short sales, foreclosures, and the selling of foreclosures in monumental proportions. I'm sure this is adding tremendous pressure to already tapped-out personnel and financial resources.
So why am I writing?
Because the reality is that the lenders are not the only bad guys in this. Politicians who encouraged the "everyone has a right to own a house" mentality, investment firms that ignored their own safeguards and purchased risky securities that lacked required documentation, buyers who wanted what they wanted regardless of whether it was wise or even feasible for them to pay the mortgages they applied for, and homeowners who chose to use the equity in their homes to buy luxury items rather than do it the old-fashioned way and save their pennies...all of us contributed to the bits and pieces that added up to the total melt-down in the lending and housing markets.
When my boys were little and something got broken as a result of their rough-housing, I always made both of them clean it up, regardless of whose hand actually did the damage. We all need to be willing to clean this mess up now, regardless of whose proverbial hand touched that last document. As frustrated I am with lenders, I do believe that they are doing their very best to get to the other side of this mountain of foreclosures. It's in their best interest. I'm sure they would rather have homeowners pay on their mortgages rather than have to foreclose. Lenders are not in the business of being landlords. We need to support their efforts to this end, not thwart them.
Home owners that do not make enough money to afford the mortgages they have should not be wasting their lender's time and resources to get loan modifications. Lenders actually learned one of their lessons and are no longer willing to strap a family with a monthly payment that they cannot qualify for nor keep up with. This is a good thing!
Politicians need to stop shrugging responsibility off of their own shoulders by attempting to place it solely on the shoulders of the lenders as they call for a "freeze on foreclosures" as if somehow the lenders continue to be the bad guy. I really think lenders are just doing their best under nearly impossible conditions. There is no question as to the delinquency of the mortgages that are being foreclosed on; there is simply an acknowledgment that proper procedures have not been followed once the delinquencies have occurred. Perhaps a freeze is necessary to shore up the process, but politicians should be asking what they can do to help the process move forward instead of doing everything they can to freeze it.
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