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Find out more about Michele: Michele Lerner has been gathering expertise about real estate for the past two decades, writing for regional, national and international publications for consumers and industry professionals. Email her with your real estate-related questions or concerns at Mlerner@gmail.com |
A recent Washington Post article brought to light something I think a lot of people don't understand about the mortgage mess: some of the lag time in modifying loans and helping families avoid foreclosure comes down to the usual culprit: the fine print.
A key point in this article describes the frustration lenders and borrowers face: the loans no longer belong to just to the individual bank that made the initial loan. Instead, mortgage loans are bundled and sold. The article says, "Millions of loans are held in these pools, called securitizations. They are governed by contracts that dictate what changes can be made to the loans."
In other words, some lenders find their hands tied by these contracts, preventing them from modifying the loans as they would like. Some lawmakers are looking into whether legislation will be needed to resolve these issues.
Is government intervention the answer? So far, the Dept. of Housing and Urban Development's Hope for Homeowners program has helped only a tiny fraction of the households in trouble with their mortgages. Now that program is being modified in a continuing effort to resolve the foreclosure crisis.
In the meantime, borrowers in trouble should continue talking to their lenders. Many lenders are proactively putting programs in place to modify loans to avoid foreclosures.
If you found this article interesting, please look at some of my other posts on the foreclosure crisis:
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