Homeowner Rescue Alliance

Sounds like a good idea, right? Not if you are actually in the loan modification business. Let’s face it, this is a “cottage industry” that no one is falling over themselves to defend.

...unless of course you are one of the hundreds of thousands of homeowners who have received a well intentioned, genuinely beneficial service.

Let’s think about this for a sec.

The explosion of loan modification companies (some legal and some illegal) is Capitalism at its best.

Market Problem:

• Lenders are overwhelmed, underpaid and to-date have been highly unmotivated to help homeowners
• Non profits have been complaining from the gate about how overwhelmed and understaffed they are. I can’t tell you how many homeowners have come to us complaining about the turn times or lack of personal touch.
• The housing market has not stabilized at all
• We’re foreclosing at a rate of thousands of homeowners PER DAY

Genuine Customer Need

• Struggling homeowners
• Their neighbors whose value is positively affected by a home being saved from foreclosure
• City governments that need less blight and property abandonment
• Mortgage Servicers who know that outsourcing is better than hiring 100 employees with salaries, benefits, etc.

Invisible Hand (See Adam Smith) Motivated Market Participants

• Laid off mortgage industry executives
• Closed down mortgage bankers
• Laid off operations staffers who used to process and underwrite loans

I’m not naïve enough to think that all of the participants are completely scrupulous, but YOU can’t be naïve enough to think that the housing market can get along fine without these participants.

Let’s just digest a quick fact: We had over 3,000,000 foreclosures in 2008. That is over 8,200 foreclosures per day! There is no way you can tell me that the industry does not need good clean loan modification to supplement the efforts of an ailing industry. For all of the bad actors, REGULATE THEM (isn’t that what regulators didn’t do the first time around) – just don’t treat all of us good guys like criminals.

And let’s not forget “consumer choice”. Government must resist treating people like children who can’t decide what is best for their lives. I understand that we’re recovering from a housing crisis that was based primarily on poor decision making across the board – but let’s let the markets operate and homeowners choose what is best for them. Do I agree with some of the pricing – NO, it’s ridiculous – but people are paying!! They’re not paying because they’re helpless fools. They are paying because they’ve tried and failed to get through to their lenders and every week their changing the requirements.

And for everyone saying that you can’t allow the people who originate these loans to modify them – a quick note of truth:

Countrywide, Wells Fargo and Washington Mutual were the largest originators in the country. THEY ALSO are the biggest mortgage servicers in the country too and contribute a good chunk of money that fund the non profits who provide this service for “free”. Between Countrywide and Wells Fargo alone they service over 17,000,000 loans – many of which are SUB PRIME.

Oh, and before I forget – many of the non profits who are doing loss mitigation used to do major home BUYER workshops that guided people through the process. The problem is we didn’t do home OWNERSHIP workshops to teach people how to keep their homes...but that’s what grant money was used for before it was redirected to loss mitigation.

I’m just making a small point:

There is no avoiding the people who got us here, because WE ALL GOT US HERE!!!

And for those who still have doubts, I leave you with this chart

...you’ll notice that we have yet to reach the peak of this think. Check out that orange arrow and then look at the year – that’s 2010 folks.

HRA Blogger

www.hrahelp.com