Why is My Lender So Stupid?

Heck Yeah! Your Bank would rather foreclose and loose hundreds of thousands of dollars than work with you to 1) forgive the late payments now that you are back to work 2) get your payments a little more affordable since "its a recession" 3) reduce the balance so you are not so ridiculously upside down, 4) give you a "market" (today's) interest rate instead of the 7.375% you got when your home was worth more than the loan. 5) or let you catch up over a reasonable period like two years.

I was at the Convention Center Home Retention Event in San Jose in February. I had my homeowner call and ask three things of the Bank 1) will someone be there who can underwrite our loan modification application? 2) will they be authorized to extend the foreclosure date? 3) will they make sure the package is complete so we can move ahead?

The answer was "YES, YES, YES".

The homeowners took the day off and I met them at the convention center. They waited all day. By the time we met with our "officer" we were all tired.

The ONLY useful thing we got out of this was the insight that our Investor does not "do PRINCIPLE REDUCTION". Without a principle reduction, struggling to keep this home made no sense at all. 

In truth everything the Bank said was yes, yes, yes was Hell No!

Later that evening I was lucky to meet one of the heads of the event from a really HUGE bank.  I told him that we came with two options my homeowner's Investor. 1) reduce the balance by $75,000 and adjust the interest rate to market or 2) accept the Short Sale Contract I had in my briefcase that will lose the investor upwards of $200,000.

The Banker gave me a stunned look!

Here is the problem. Bankers are "servicers". They make their money on "fees". They get paid to send the bills and collect the money. That part is pretty competitive. Once the loan goes late, that is where they stick it to everyone! Including YOUR Investor!

No, the Bank is not your Investor. The Bank is similar to an overpaid, bad attitude clerk. That is why they disconnect you when you call; give you bogus information, treat you like you are the jerk. You know what I mean!

Your Investor could be the Teachers Association of Laredo's Retirement Fund. The crime is the Teachers  have no idea that you may be willing and FULLY QUALIFIED to give them a much better deal than the bank will tell them.

Face it, if I laid out for You two losses for you to take, one is $75,000 and the other $200,000 I don't have to guess which one you will take!!! The Teachers association would do the same thing. But Your  Lender Doesn't Tell Them.

Your Lender makes more money out of charging both You and Your Investor Fees than by helping the Investor make money. Since your "Lender/Servicer" has all the power and control, common sense will never apply.

I know this is not good news. I do hope you find it helpful. Feel free to call and ask me about your scenario. I am not an award wining, super Blogger Yet. I always have time for your friends and family.