By Carla Ghosn, founder and CEO of Mycaal.com.
As the Christmas season approaches (will Santa be dropping off many loan modifications?), which is supposed to herald a season of generosity and selflessness, how about the notion of banks consenting to a moratorium on home foreclosure processes for a period of time? California AG Kamala Harris has expressed agreement with the idea of putting a halt to foreclosure proceedings for a while. She gave this response subsequent to listening to one and a half hours of emotional testimony given by distressed Californian homeowners. The occasion was a round table conversation about the housing market crisis, which took place in San Francisco on Monday.
Based on information released by the Center for Responsible Lending (CRL), not even half of the housing market storm has been experienced yet since the bubble burst in 2007. Of all the home loans initiated between 2004-2008, 6.5% have ended in foreclosure, with a further 8.3% facing the imminent threat of the same fate. And the tide has not yet begun to turn. Those who are most severely affected, based on the CRL report, are homeowners with the type of sub-prime and other questionable mortgages that are burdening millions of people across the country.
The stories that were shared on Monday have been heard before, and for some time now. Borrowers being exploited by unscrupulous lenders and loan modification scam artists, banks giving homeowners nightmarish mortgage modification experiences (including the dual track practice of pursuing foreclosure proceedings while hindering loan modification efforts). And all the while, the avalanche of foreclosures in California, and indeed across the United States, shows no sign of slowing down any time soon.
Californian homeowners are expecting decisive and swift action from Kamala Harris. She stated that the ‘dual track’ issue represents one of her most urgent priorities. Harris has been engaged in talks with state and federal lawmakers in an effort to create a legal framework that injects some much needed reason and ethics into the housing market situation. Legislation of this nature did make it past the Assembly in 2010, but it came to a grinding halt in the state Senate. As far as convincing lenders to demonstrate some compassion during the Christmas season, Harris stated that she anticipates at least a degree of willingness on the part of some banks to comply with that kind of request.
Harris implied in a short interview that she may well pursue this issue in person with the relevant banks. How these banks respond to the AG’s suggestion remains to be seen. In her own words, as much relief as possible must be secured for struggling Californian homeowners, of which 2.2 million are currently bound to mortgages that are underwater. This is not the kind of statistic that inspires any sense of hope or optimism.
Seems to me we have yet another conversation on the housing market issue in which lovely sounding rhetoric is thrown around, promising all sorts of relief for troubled borrowers, but how much of the talk actually translates into concrete, positive action is anyone’s guess. Homeowners have been hearing these kinds of assurances from all kinds of state and federal officials for some time now, and it seems that the only consistent feature is the constant lack of action on their behalf. As a homeowner reading this, how frustrated have you become with all these empty promises and claims? Let us know how you feel on Twitter, Facebook, or Mycaal.com.