Ronald Regan made the now famous statement about thirty years ago that the phrase “I’m from the government and I’m here to help”, was a phrase that Americans everywhere have learned to fear. The current mortgage/housing/financial crisis has only reinforced that view for many of us that have had to deal with the destruction of the American dream since this economic debacle began in 2005.
It is clear to me from my day to day dealings with home owners and former homeowners that the government most assuredly is not “here to help”. A big part of my business has become handling cash for keys for banks. Cash for Keys or Relocation Assistance Programs run by lenders to help the occupants of foreclosed properties find a new home and move. The programs are for the most part well run and helpful to the occupants. I do about two or three of these a week. Here’s the way the government “help” becomes tragic: almost everyone of the people I talk to has applied for assistance under the HAMP or HAFA programs offered by the government; almost no one has benefited from these programs; almost all the people I’ve spoken with in the course of doing Relocation Assistance for lenders would have been better off had they never heard of these programs and several have been the victims of outright fraud.
Example: I spoke with a local family last week that has lived in their home for about nine years. They never refinanced, they never took out a home equity line of credit. They have three small children two under the age of five. Over the last nine years they have worked on their home fixed it up as they went along. Early last year the husband lost his job in construction, so he took a job that didn’t pay as well at a fast food place and the wife went to work part time and they burned up some savings but kept their house payments current – they need a place to live, right? They struggled along and they called their mortgage company; their mortgage company told them to apply for the HAMP program. They didn’t understand what it was so they went on the internet and found an attorney that advertised he would help them negotiate the process. They sent their full mortgage payments to him; he was to get the loan modified; after the fourth mortgage payment was taken out of their account sent them an e-mail and said there’s nothing else he can do; house went to foreclosure. Fundamental problem is the creation of false hope by the HAMP program which a reasonable person will see is non-workable so they hire someone who must be “smarter” than them to set it up, unfortunately he was just a crook.
Example: I spoke with a couple in their early sixties; they’ve lived in their home for 31 years; they raised their kids and ran their business from their home all that time. They got behind on their mortgage when their small business started to fail in mid 2007. They struggled to keep things afloat and did. They contacted their mortgage company to see if anything could be done after meeting with local REALTORS about selling their home; they were surprised at first to find that they owed more than their home was now worth and that there was “no way” they could sell their home without having a substantial deficiency due to the bank. They became aware of the HAMP program and decided they would try the program. They were told that they no longer “qualified” for the amount of the mortgage they had and in order to complete the program would have to bring money to pay down the loan amount. Seriously?
By Dick Thackston CRB, ABR, ABRM
Broker NH, MA & VT