The Covid 19 pandemic pushed many homeowners into delinquency.  Most were sent into forbearance with a promise of a permanent solution….however, the contrary actually happened.  When the pandemic foreclosure moratorium ended, mortgage servicers took a different aggressive approach which has caused foreclosures to skyrocket.  Here is what’s behind it all….

1. The foreclosure moratorium was just extended way too long!  The Federal government kicked the can down the road, with no end game solutions set up.  Homeowners fell further and further behind.  The banks and mortgage servicers felt cheated by the system, so their patience and cooperation with loan workouts has been very limited.
2. The home equity explosion from 2020 to 2023 has pushed many banks to say “Sell and pay us off in full”….”Or get out”.  Remember that this was definitely not the case during the 2008 to 2012 Financial Crisis when underwater mortgage debt ravaged the market.
3. The recent incredible rise in mortgage rates has killed the mortgage business on the front end.  The revenue drought on the front end of the market has forced a hard core collection game.
4. Unlike the 2008 to 2012 Financial Crisis, there are no set government programs for loan modifications.  There is absolutely no incentive for the banks to participate….it actually costs them a tone of money.

So what are the options for leverage on getting a loan modification done?  The CFPB has implemented a series of rules in regards to foreclosure and the independent state laws regarding mediation also.  The roadmap on both of these is not very clear…pretty complex stuff that leaves most homeowners in the lurch.  Feel free to reach to our office at 414.737.7116 for free insight on this topic.