Consumer Credit Alert: Choose Your Real Estate Agent Wisely

Article by Richard Kaye

Debt Relief IQ is a unique on-line consumer debt relief portal that automates the way in which consumers manage their credit debt, is 100% free of any upfront or enrollment fees and gives control back to the consumer utilizing easy to use software. In an environment of extreme government regulation where little help exists to help the consumer navigate back to financial solvency, the consumer is in dire need for simple, straight forward tools to moderate their spiraling foreclosure rates and credit debt problems.

Unfortunately, the lender servicers are clearly not doing their part. I recently spoke to a colleague at one of the Mega-Servicers who shared with me that out of the last 20,000 Home Affordable Modification Program (HAMP) packages sent to homeowners that only 400 of those packages resulted in a completed loan modification. In fact, the Amherst Securities Group recently released figures showing that 80% of all nonperforming private-label mortgages have not been modified after 12 months and as of Sept. 30, 2010, that the Fannie Mae servicers had completed only 321,800 modifications including 158,800 restructurings that meet Home Affordable Modification Program (HAMP) specifications out of nearly two million note holders believed to be eligible for loan work-outs. Fannie has 60,500 borrowers in HAMP trials, which represents only 6% of its seriously delinquent loans.

With the vast majority of homeowners not being helped by loan modifications, many consumers have turned to short sales to try to avoid foreclosure. In a short sale, the lender must agree to accept less than the original note granted to the homeowner. A distressed homeowner that can absolve their obligation through a short sale instead of foreclosure will mitigate the damage to their credit, as the negative effects of a foreclosure can last up to ten years whereas the damage created by a short sale to consumer credit is generally limited to the number of monthly delinquencies up until the short sale (3 months late, for example).

Typically, most lenders have prefer to facilitate the short sale process because it is less costly than foreclosure. With foreclosure comes preservation costs, for example, which are the costs associated with maintaining the property such as grass cutting, pool maintenance, HOA fees, etc. and can add up to several thousand dollars that the lender servicer must pay; remediation costs, such as replacing stripped copper piping or repairing extreme damage are required to be paid in order to get the foreclosure ready for resale. Even though a short sale is generally less costly to the lender servicer than foreclosure, the process can be long, arduous, and riddled with compliance issues that have caused lender servicers to delay short-sale approvals, even though the general economics is better than foreclosure.

Real Estate Agents

Although many Agents are making full disclosure to homeowners as to all of their available options, many Agents are motivated strictly by making transaction fees at the expense of homeowners and even the lenders themselves. In Connecticut, for example, two real estate agents found a way to profit: Sergio Natera and Anna McElaney were convicted in Hartford