Monday, February 22, 2010

Recession In Real Life

Has anybody stopped to look at real people, and not just to discuss economic theory. The theory states that a "recession occurs when there are two or more consecutive quarters when the gross domestic product ("GDP") falls". GREAT - what does that mean? To most of us NOTHING. It’s just another scorecard for the government and the entities that control the money supply, the interest rates, the federal budget, and the stock market, and of course, it is important for economists.

The problem for the un-wealthy is that this country is "...Of the People, By the People, and For the People...". The key word is "people" - that is opposed to "person". The government, out of necessity, looks only at the TOTAL financial picture of the ENTIRE country. Policy is made for a GRAND SCALE, the people, so that "on average" a stimulus package will work; a foreclosure prevention program will actually abate the crisis of people losing their homes; the unemployment rate starts to decline.

"On average" does not help any individual, just the larger group. By that I mean that there will be a few that do very well, a few that really get hurt, and the vast majority probably survive - but barely!

Look at the results of the Making Home Affordable Program, the parent to the Home Affordability Modification Program ("HAMP"). Foreclosures continue at numbers far exceeding what we have seen in the past, and much of the slow-down in the pace of foreclosures is because mortgage companies just do not want any more inventory.


1. American Home Mortgage Servicing Inc. ("AHMSI"), the 6th largest servicer in the country, has 124,300+ loans it was handling that are more than 60 days delinquent and program eligible. Just 10,000 (9%) of these were in the first step to a modification, a Trial Modification Program; and only 232 (less than 2/10ths of 1%) had permanent modifications. No wonder - I submitted a package, with ALL of the required documents for a client, and after waiting 3 months, he was offered a Trail Modification that INCREASED his payments by $180/month - 17%. His loan was sold through Predatory practices, a fact of which AHMSI and its attorneys are aware but, so what! ON AVERAGE, when they do a modification, it helps.

2. Wilshire Mortgage (technically Wilshire Credit Corporation) buys and services large blocks of mortgages. My clients fell behind due to a loss of pay - (company closing so $18/hr became $8.10/hr), and because of very bad accident, where husband was out of work, getting grafts etc, for 8 months. I submitted a COMPLETE HAMP package to Wilshire, using their forms and comprised of 40 pages, on August 19, 2009. In early January I called as we had received no response despite many telephone calls to the company. I was told that they had the documents but they were now out of date - please update. I sent a full new package per instructions on 2/2/2010, but the scheduled foreclosure sale for 2/17/2010 would not be postponed. So I filed for protection under Chapter 13 of the Bankruptcy Code THE DAY BEFORE THE SALE, and have filed suit against Wilshire within the week.

3. HSBC/HFC/Household Finance (I & II)/Beneficial (all the same owner - HSBC) had been sent documents over a month ago. I contacted both the foreclosure attorney and HFC’s (et al) primary litigation counsel for help. Literally the day before the sale was to take place I had to file suit to stop the sale. The loan was a "bait and switch" with multiple sets of original documents, with a last minute increase in the interest rate, federally and state required disclosures not given to the borrowers, or or incorrect on the face of the documents. No modification was ever even offered to the borrowers despite their submission of documents.

4. The mortgages I have with JPMorgan Chase, Bank of America and Bank of America Home Mortgage (the old Countywide), Saxon Mortgage, OneWest (formerly IndyMac Bank)and several others, follow the same pattern


In ALL of the above cases, my clients can afford their mortgage with a rate reduced to 5%. In all cases, the necessary paperwork was filed timely to prevent a foreclosure sale, but WITH THE SPECIFIC MORTGAGE the lender/servicer was just too busy. ON AVERAGE the claim is that the companies are responsive and adhering to the MHA program guidelines. That may be true but dealing with SPECIFICS, people are losing their homes. I have at least 15 cases just like these with more coming in every day - and most are taken with the hope that the lender will have to pay attorney fees because the clients do not have the money.

MHA, HAMP, HARP, TARP, and the other acronym programs, work "ON AVERAGE" - or in these cases they DO NOT. Even the Government’s grand scale of looking at problems for the mass solution do not make any sense. It’s like looking through binoculars backwards. Everything looks fine until you hit the iceberg.

Author's Copyright by Richard I. Isacoff, Esq, February 2009

1 comment:

San Diego Bankruptcy Lawyer said...

I am a San Diego bankruptcy lawyer and I love this post. Dealing with people who actually have to file bankruptcy in this recession, it's frustrating to see the generalization of both problems and solutions, as well as programs that just aren't working.