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Colin McKnight | February 12, 2008 at 9:44 am
The kickoff meeting was very informative. I found Superintendent Neiman’s comments very helpful, because I typically don’t hear about the activities of the banking dept. In his comments, he talked about his concern that so many homeowners facing default don’t even try to contact their banks to modify their loans. I can’t help but wonder if this is because many homeowners in that situation can’t even find the banks that own their mortgages anymore. I know that when I refinanced my mortgage a few years back, I was surprised to find out that my mortgage had been sold 4 or 5 times. I had never heard of the bank that ultimately held it when I closed on the new financing. I have heard that there are homeowners facing foreclosure who can’t even reach the bank they need to talk to about modifying the defaulted loan. And the staff at the servicing bank may not be all that helpful in directing the borrower, if the servicing bank staff can even figure it out. While the borrower struggles with trying to get the correct contact info, valuable time slips away.
This does raise an issue with regard to SONYMA’s Keep the Dream refi product, which has a 60 day window of eligibility. By the time a borrower has actually located the owner of the mortgage, that 60 day window may have mostly, if not entirely, slipped away.
It makes me wonder if a rather simple solution to include in the new package of regulatory reforms proposed by the banking dept. might be a requirement that the name and contact phone number of the actual owner of the mortgage must appear on the mortgage statement sent to the homeowner each month.
As for those homeowners who wouldn’t try to contact their bank even if they had the correct information, I recognize that there is a stigma attached to going into foreclosure. It makes me wonder if there isn’t a corrollary to the stigmatization that happened to people with HIV and AIDS in the 1980s and 1990s. Serious progress in finding treatment only happened when HIV positive persons stopped being stigmatized. Again, here, perhaps we can find a message that encourages homeowners in trouble to seek help because they have been victimized, not that they made a poor choice of some kind.