From the New York Times:
Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday that the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.
“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.
I am wondering if shame is the new step to take in getting the banking industry to do what the government wants them to do? It worked when I was young and my Mother used it, but I think there really may be a more adult way and I am wondering who the adult in this situation really is?
Last month it was reported that fewer than 2000 of the 500,000 loan modifications that were then in progress had become permanent. Has the Making Home Affordable program worked with any of your clients? We throw the term “loan modification” out there but who has seen real progress in this? I know of only a few and then not personally but “someone who heard of someone who”.
I am seeing progress in the time frames of processing Short Sales and the ease of doing so. By 2010, I do think that there will be a more standardized system and would welcome that. I certainly prefer a Short Sale over a foreclosure.
Until then “shame on you” – feel better now???
Welcome from the Brainerd Lakes - where outdoor and indoor recreational opportunites abound. Looking to buy on one of our many lakes? Ready to move up or down? Having trouble selling your home? Falling behind on payments or already in the foreclosure process? I am a Certified Short Sale Specialist as well as a Home Staging Expert.
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Gotta do something. I suppose that Shame works for some. For others, I love when they "do the right thing." Those who do the right thing rise to the top.
Shame?! To motivated the banking industry? How about jail time?
Couldn't hurt, I guess.
It's like I have always said, corporations are all heart. (Just Kidding)
Thanks for the post.
We are too far past shame. Now there needs to be prosecution and jail time, as well as government intervention to stop this madness.
Kathleen. I've known people who have been working for 6 months or more to get a loan modification. Some with professional assistance.
It works in the banks favor to let the home go into foreclosure. If you are currently living in the home, and trying to keep it through modification, the first thing the bank assumes that the house is going to be in reasonably good shape. Therefore easy to sell if they have to take it back.
What incentive do they have to modify and lose money? The government is offering them a pittance.
Kathleen, nothing else has worked. The banking industry is still thumbing their noses at us. So whats to lose? BTW how are the horsies?
I guess shaming them can't hurt. But how about simply saying that if something doesn't change immediately, the TARP funds will be due and payable in 30 days, and if your bank fails it fails.
Kathleen, don't you wish that shame would work. Unfortunately, I don't think they even have a clue as to what the every day working people have to go through. Do short sales really help when tax time comes around and the seller finds out he's getting a 1099-C form from the Lender and will have to pay taxes on the money that was the difference in what he sold verses what he owed because the Lender forgave part of the debt? I'll be writing a blog on this on my site.