Six months after the $25 billion mortgage relief settlement was signed, it appears the remedy has fallen quite short.
Of course, Miami foreclosure lawyers had recognized at the time of the deal that it was essentially a slap on the wrist to banks and mortgage lenders. Consider that the amount equaled only a sliver of the damage that had been inflicted on the economy and homeowners. What’s more, much of it was essentially structured in such a way that these financial institutions could continue conducting business as usual.
But now, with a new report from the Office of Mortgage Settlement Oversight, we see not only how little banks have been penalized, but also how very little impact this deal has had on those who need it most.
The new report indicates that between March 1 and June 30, less than 140,000 homeowners received some form of relief as a result of the settlement. That is about the number that were expected to have received relief through a number of aid programs that were already in place prior to the settlement agreement.
What’s even more troubling, Moody Analytics estimates that we still have some 3 million homeowners who are either currently in foreclosure or are on the verge.
More forceful – and swift – action is going to be necessary if we want to have any hope of turning this market around. Underwater homeowners in Miami must seek a legal advocate that understands which relief measures are worth pursuing, and which may be more difficult to obtain.
Of particular concern in the recent report are the short sales. It’s not always a terrible option. Essentially, a short sale allows a homeowner to sell their home for less than they owe. It actually is a benefit to the banks, which get more money than they might in a foreclosure. Homeowners get to avoid having a foreclosure on their credit, but it doesn’t keep them in their homes.
The problem is, there has been far more debt written off in short sales – about $9 billion nationwide – than has been in loan modifications – about $750 million.
Now to be fair, this is just the first report, and we are likely to see more progress in follow-up reports. But it seems very clear, based on these statistics, that banks have little to no interest in keeping people in their homes – despite their promises with the government. Instead, they are only interested in their bottom line.
On top of it all, we have a mortgage debt tax forgiveness that is set to expire at the end of the year. This could end up costing underwater homeowners tens of thousands of dollars that they don’t have.
There are bills that propose extension of the law, but they have yet to materialize or gain enough bi-partisan support.
Additionally, a federal investigation into the actions and abuses that led to the financial meltdown has essentially fallen flat. Although we have clear culprits, no criminal or civil sanctions have been proposed – and it’s unlikely we’ll see them anytime soon.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.
Still No Justice for Mortgage Abuses, Editorial, The New York Times Sunday Review