Loan Modification: Homeowner Help or Hype?
There Is Growing Chasm Between REALTORS® and Consumer-Friendly Nonprofits
Foreclosure news for distressed homeowners ranges from bleak to dismal.“Fewer than 10% of U.S. homeowners eligible for a government-backed loan modification have received one.”
The Arizona Republic (May 16, 2010)“The number of borrowers dropped from the [government’s loan modification] program… eclipses those who have been helped.”The Washington Post (June 22, 2010)
The news is better in Arizona, where homeowners often have a 30-50% chance of a sustainable loan modification…with nonprofits. Unfortunately, nonprofit resources are stretched and severely limited.
What Is a REALTOR®’s Role in Loan Modification?
There is no evidence of success at large with REALTOR®-assisted loan modifications in Arizona or elsewhere in the country.
Real estate has always been a tale of “a seller’s loss is a buyer’s gain.” That’s real estate. That’s life. In an age of increasing foreclosures, there is new listing bounty and opportunities for buyers to capitalize in a price-compressed marketplace.
“Most NAR members are in the sales business. They don’t make money unless a home sells, so it’s hard to fault them for trying to keep their business moving,” said Stacey Moncreiff, editor-in-chief of Realtor® Magazine.
If Moncreiff is right, REALTORS®’ attention is focused on two sets of consumers: buyers and sellers.
There is another bucket of consumers: homeowners who want to KEEP their homes.
Loan modification is a route for homeowners to redesign financial relationships with their lenders for long-term, sustainable solutions and a chance to keep their homes. REALTORS® undertake loan modification discussions from a variety of perspectives.
Arizona REALTORS® have the good fortune to enjoy the leadership of Holly Eslinger as Arizona Association of REALTORS® (AAR) president and Michelle Lind as AAR general counsel. Both women are staunch advocates of caution in the foreclosure arena.
“If you help homeowners navigate a loan modification, be aware that your E&O policy might not cover your actions if you’re sued,” says Lind. “Providing such help is considered the business of housing counseling agencies, not brokerages…”
Lind’s other concerns include: Is this activity outside the scope of a real estate agent’s expertise? Does the agent’s broker permit it? Is a license required (depending on the scope of service to be provided)?
There is a chasm between organized real estate and consumer-centric nonprofits. Each eyes the other warily.
Sadly, REALTORS® are not perceived as trusted advisors by many nonprofit professionals. In fact, the word REALTOR® does not appear as a recommended consumer resource at Arizona foreclosure events. I attended an event in Tucson where the word REALTOR® appeared only once in a day-long event with hundreds of consumers. A leading state bankruptcy/foreclosure attorney pointed to REALTORS® in a cautionary presentation about “Predators and Scam Artists.”
A Tale of Two Homeowners
Imagine you are a homeowner. You are facing foreclosure. You want to keep your home. What are your options? Let’s examine two possibilities.
What’s the verdict? If you are a homeowner who wants to keep your home, would you select a short sale expert or a loan modification specialist working for a nonprofit with a proven track record?
REALTORS® have little success processing loan modifications. Loan-mod-for-money companies tout high success rates, but their success is tied often to short-term solutions, not long-term, sustainable results. The high failure rate of loan modifications across the board is sad evidence of the fruits of their chicanery.
Success in business is up to us. We can be victims of a down market or we can be drivers—and thrive.
Success in home retention is no different.
Success starts in our minds, as a thought.
“Whether you think you can, or you think you can’t, you’re right!” – Henry Ford