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Our View: Homeowners shouldn’t have to beg for lender help

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The talk is that the housing market is getting better – tell that to the Futrells. While the market has been showing modest signs of growth and the foreclosure wave seems to be ebbing — foreclosure activity is at a five-year low in this state according to DataQuick — there are still many cases such as that of Donna and Shaun Futrell. When you read this Garden Valley couple’s plight for the first time, it’s touching, but it’s also not shocking, either. Another telling sign of how deep this housing epidemic still goes is that the people who have offered to help this couple are themselves battling against foreclosure. While there are those who have made bad choices and therefore have fallen on hard times by simple fault of their own, there are many who were caught up in the perfect storm of unfortunate circumstances, the collapse of home values and mass layoffs nationwide. As more and more lenders start to play ball and work harder to provide borrowers with options to stay in their homes, including loan modifications, or in some cases if that’s not an option, successfully complete a short sale, there are still some major lenders dragging their feet – it’s time for that to stop. We need a much more fluid system that quickly and thoroughly works with homeowners to discover the right option for them in their time of crisis and how to execute it – whether it be a loan modification or a short sale. The California Homeowner Bill of Rights, which will take effect on Jan. 1, 2013, will require lenders to designate a single point of contact for a borrower seeking a loan modification and will stop the foreclosure process while the borrower is applying for a loan modification. Along with this one key piece of the law, there’s a host of other safeguards designed to bring transparency and accountability. With more than one million homes lost to foreclosure in California, according to the Office of the Attorney General, this type of legislation was needed, and might have made the process for the Futrells much less traumatic. Imagine trying to save your home, only to be bounced from bank representative to bank representative, basically starting from scratch every time you pick up the phone – it’s enough to make you give up. When one has to turn to begging for attention from the media, which requires sharing a terribly painful and private story with the public just get your lender to listen and give you a serious review of your situation, something’s wrong. Real help must be given as well, not just a prolonging of the inevitable. While a loan modification may allow someone to stay in their home for the time being, there have been cases where there hasn’t been a reduction in principal (when a house is more than $200,000 underwater, will that equity really come back?) or forgiveness of arrears, which means these costs are added to the end of the loan, sometimes resulting in a balloon payment that could cost the borrower the home. Unfortunately, loan modifications aren’t the panacea for all struggling homeowners, and it might not be for the Futrells’, either. In some cases it’s been reported that borrowers who have received a loan modification have still lost their home, sometimes in as little as six months after the modification. Other options need to be more easily executed, such as short sales, something the couple on Garden Valley Road tried, but also failed at when trying to work with their lender. But, this is an area where there seems to be improvement. “We’ve seen a lot of movement with short sales in the last year. Short sales now out-space real estate-owned properties,” Dustin Hobbs, communications director with the California Mortgage Bankers Association told the Journal. “Lenders now have built-in systems in place to handle a high level of short sales.” While legislation, settlements and investigations have opened up more options for those needing a hand up to keep their homes, the focus must continue on seeking a whole-hearted commitment to the programs and borrowers by the lenders themselves. As the Futrells proved, they were willing to ask for help, it was just a matter of the lender really listening to that plea. ----------- ONLINE Read “Despite adversity, couple battles to stave off foreclosure in Garden Valley” at www.auburnjournal.com to learn more about the Futrells