Tell Lenders to Provide Automatic Loan Modifications For All Borrowers (No Qualification Needed)
  • Petitioned President of the United States

This petition was delivered to:

President of the United States
U.S. Senate
U.S. House of Representatives

Tell Lenders to Provide Automatic Loan Modifications For All Borrowers (No Qualification Needed)

    1. Lorena  Colin
    2. Petition by

      Lorena Colin

      SARASOTA, FL

Most of the programs created to keep borrowers in their homes and avoid foreclosures are extremely complicated, long, and unclear because they imply a strict process of qualifying not only the borrower but the loan as well.

During the times of the real estate boom, sub-prime mortgages were offered to pretty much everyone, some people did not have to qualify according to conforming rules (no income proof was a big one), so why would they need to qualify now to keep their homes if the intention is to avoid foreclosures?

The 700 billion dollars used to bailout banks with the financial reform (recently estimated to approach the 5 trillion ) did not poor down to the majority of the population since they were given to the lenders without the condition of implementing common sense practices in exchange.

PROPOSAL: Give the home owners the chance to keep their homes and continue making their payments on a “reasonable” and automatic modification. The current process of qualifying homeowners before they can get the modification it’s not only absurd, but time and money consuming.  We ask the lenders to provide automatic and reasonable loan modifications without having to qualify the borrowers, so that we avoid millions of foreclosures. 

WHAT WE CONSIDER REASONABLE: For example, re-amortizing to 30 or 40 years and offering a 2% fixed interest rate for the first 5 years and after that a change to 6% fixed rate for the rest of the term of the loan (the other 25 or 35 years). 

BENEFITS: Having automatic loan modification for every homeowner would keep people in their homes, making their payments (which reactivates the economy and the confidence in lending institutions to keep lending), it would give them back the sense of responsibility and importance of having a good rating, it would avoid the tons of foreclosures that damage the market, it would minimize fraud, it would save lenders and borrowers thousands in legal fees, it would avoid damages on the properties and vandalism, it would also stop the clogging of the judicial system, it would save time, paper, money, it would eliminate the work of people on loss and mitigation departments who are not really knowledgeable or qualified, it would minimize the wide discretion given to the lenders to authorize loan modifications under unclear and complicated criteria, it would turn the way we are going all around. The economic crisis derives from the real estate and mortgage crisis and ensuring we stop it on time will ensure the recovery of the country. 

Recent signatures

    News

    1. Reached 100 signatures
    2. Suggestions and changes to the Petition are welcome

      Lorena  Colin
      Petition Organizer

      Hello, we know each of you have a different story; if you feel there is something that needs to be added or changed to the full petition (right under the Overview), leave a comment. This is a petition for everyone affected by this issue.
      Thanks

    3. Reached 50 signatures

    Supporters

    Reasons for signing

    • Maneesh Pangasa YUMA, AZ
      • about 3 years ago

      There are better alternatives than the ones currently used by the Lenders and the government. It is imperative for the government to take firm decisions to bring real solutions to the people and not just band-aids, to reverse and control the negative impact in our economy.

      BACKGROUND

      The 700 billion dollars used to bailout banks with the financial reform (recently estimated to approach the 5 trillion ) did not poor down to the majority of the population since they were given to the lenders without the condition of implementing common sense practices in exchange. The government has recently created different programs to help homeowners such as HAFA, HAMP, EHLP and others, but they failed because of lack of simplicity or not attacking the real problem.

      Most of these programs are extremely complicated, long, and unclear because they imply a strict process of qualifying not only the borrower but the loan as well.

      During the times of the real estate boom, sub-prime mortgages were offered to pretty much everyone, some people did not have to qualify according to conforming rules (no income proof was a big one), so why would they need to qualify now to keep their homes if the intention is to avoid foreclosures?

      SAVING CUSTOMERS WITH NEGATIVE EQUITY AND ARM LOANS

      It is suggested that some people who “let their homes go”, stop paying BECAUSE IT MAKES SENSE. They have decided that it is NOT intelligent to keep putting money on a house where the payment is high (or it has just increased due to an ARM loan) and at the same time they have a huge amount of negative equity (sometimes the market value on their homes is half of what they owe to the bank). So they have decided they are ready to take the next step and let foreclosure begin, even though that means destroying their credit rating. This is NOT a definitive decision and it CAN be reversed because usually the borrowers are emotionally attached to their homes; nobody wants to pack and to have to look for a place to rent. Most people prefer to do the right thing, so they are willing to keep making the payments as long as they are REASONABLE and with a fixed rate (people need to feel they have a GOOD deal). Many of these borrowers have been trying to do something about it, but lenders just DENY their loan modifications without offering other options.

      FILLING OUT LOAN MODIFICATION PACKAGES

      One of the key elements in determining if a borrower "qualifies" for a loan modification depends on how accurately the borrower fills out the modification package (a huge stack of papers) and that the information provided complies with the lender's criteria. This generates two situations:

      1. FAILURE TO OBTAIN: if the home owner decides to fill out the package himself, without professional assistance, most of the times he will be denied due to the ratios established by the lenders to prove that they make more money than their monthly expenses (to show that they are able to repay the loan). Not only that, but the lenders will require proof of income such as tax returns, paystubs, bank statements, profit and loss statements in the case of self employees and a hardship letter, requirement that as discussed before would let all the subprime borrowers (investors, business owners and people who get paid in cash) out of the benefit. Also, due to ignorance, some people believe that the bank it is going to reduce their payment if they say they are making less or no money and they usually get denied their loan modifications for that reason (how are they supposed to know the lenders guidelines?). So let’s go over the requirements again: they need to prove they have a hardship that it is making hard for them to continue making the payments on the house, but at the same time they need to show they make enough money to cover this payments and their monthly expenses, is not that a little bit contradictory or complex for an average home owner that knows nothing about ratios?

      2. ABUSES AND FRAUD: if the homeowners really want to increase their chances of getting qualified they would seek for professional assistance. If they try to use one of the free governmental services like “Hope” it would take several months to get it done. If they look for a private party (which is the circumstance that gave place for fraud and abuses of people charging excessive upfront fees for loan modifications) the customer is again at the mercy of the person that will “help them”. It is no secret that there are companies and Law Firms that charge a couple of hundred dollars a month to the home owner to delay the process of foreclosure through litigation, how ever, this is not a permanent solution, the home owner will end up loosing the property and our market will be affected again; this type of “solutions” only postpone the chaos.

      AN EXAMPLE OF WHAT HAPPENS ON A LOAN MODIFICATION PROCESS

      Customers receive the modification package over the mail (wasting paper and expensive postage via FedEx or UPS) usually more than two times. After filling it out, they fax it back (more than once) or return it via mail as instructed with the prepaid envelope provided.

      When they call the lender, it takes one hour waiting on the phone to speak to someone, the bank’s representative tells them that it takes anywhere from 60 to 90 days to find out “if they are qualified”. They also mention that the loan has to qualify according to whom is the investor (so are we the borrowers liable for the transactions on the secondary market?) and the customer has to qualify according to their ratios, income proof and hardship. By the way, the term “hardship”, as discussed before, disqualifies from modifications any customers who have continued making all of their payments, they still have the means to pay the home, their income has NOT been reduced, but they are looking for a modification because they have a considerable negative equity. Of course this type of customers would not be considered in "hardship" and therefore, their loan will not be modified, even though they have the same right to get an opportunity as everybody else.

      Going back to the average homeowner case scenario, two months have gone by without receiving any news (except for annoying collection calls every hour); when the home owners call back to find out the status of their modification, they are advised that they had just changed the loss mitigation specialist on their loan and the process has now started all over again. After another 60 days, they get a “trial modification” where they have to pay $2,000 as a down payment. 30 days after that, they get a notice that reads “We are sorry to inform you that your modification request has been declined”.

      Who would not be frustrated with a process like this?

      Why doesn’t the government condition the grants of money to the lenders in exchange for simple and common sense practices?

      THE SOLUTION

      Automatic reasonable modifications.

      Reasonable: For example, re-amortizing to 30 or 40 years and offering a 2% fixed interest rate for the first 5 years and after that a change to 6% fixed rate for the rest of the term of the loan (the other 25 or 35 years), no I did not invent this, it was actually a modification granted by Bank of America to one of my customers. This is much better for the lenders than having to incur in all the legal fees involved in a foreclosure process and the damages on the property afterwards.

      Automatic: Why not give the home owners the chance to continue making their payments? They are willing to keep the houses, so the process of qualifying homeowners before they can get the modification it’s not only absurd, but time and money consuming. Provide automatic loan modification without qualification of the borrowers if the intent is to avoid foreclosures.

      BENEFITS

      Having automatic loan modification for every homeowner would keep people in their homes, making their payments (which reactivates the economy and the confidence in lending institutions to keep lending), it would give them back the sense of responsibility and importance of having a good rating, it would avoid the tons of foreclosures that damage the market, it would minimize fraud, it would save lenders and borrowers thousands in legal fees, it would avoid damages on the properties and vandalism, it would also stop the clogging of the judicial system, it would save time, paper, money, it would eliminate the work of people on loss and mitigation departments who are not really knowledgeable or qualified, it would minimize the wide discretion given to the lenders to authorize loan modifications under unclear and complicated criteria, it would turn the way we are going all around. The economic crisis derives from the real estate and mortgage crisis and ensuring we stop it on time will ensure the recovery of the country.

      CHALLENGES

      Recent alternatives proposed such as eliminating government subsidized loans (FHA) or increasing down payments to 20% on conventional loans are not good options. These would hurt more than help because they would place a burden on the housing market, on the sell of properties, on the reactivation of the economy. Eliminating tax breaks for new homeowners won’t work either. The work has to be done with the problems that we already have stopping foreclosure and encouraging new buyers to purchase what it’s already out there and it is dragging the prices down.

      The greatest impact will come from the millions of people that are currently in foreclosure procedure and where the worst is yet to come if decision makers don’t move fast.

      MAKE LENDERS CARE

      The ugly truth is that banks don’t really care if customers don’t pay their mortgage, why? because if they loose them they will get a write off on their corporate taxes for their loss and they will then issue a 1099 to the borrower, on one side, on the other side, they will receive money from the government through financial bailouts or through programs such as the newly created “EHLP” which helps the home owner make part of their payments for the first 2 years or $5,000, whichever comes first (more money to the bank, and after the 2 years what?). In the meanwhile, banks gather in their inventories a great amount of “Bank owned” or REO properties free and clear that they got at a great value and they hold them expecting the market to go up again.

      LAW MAKERS AND POLITICIANS: WE ASK YOU TO CHANGE THE RULES TO FORCE THE LENDERS TO AVOID FORECLOSURES BY PROVIDING AUTOMATIC LOAN MODIFICATIONS.

      DO IT BEFORE IT IS TOO LATE.

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    • tommy palomino BRADENTON, FL
      • about 3 years ago

      como estas espero muy bien saludos y suerte a toda tu familia

      REPORT THIS COMMENT:
    • Marcos Whyte DECATUR, GA
      • about 3 years ago

      Tell JPMorgan Chase/EMC to stop playing games and just give us the modification needed. I am tired of trying to find creative ways to save my home with no increase in salary while everything else has increased in cost.

      REPORT THIS COMMENT:
    • Ray Dragon RALEIGH, NC
      • about 3 years ago

      I believe the petition proposal is reasonable in that lenders still make a steady income while lowering the risk of default for "at-risk" borrowers while helping out EVERYONE by providing automation interest reduction/term increase, putting more money in the pockets of ALL homeowners, thereby providing more disposable income to sink back into the economy.

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    • Carolyn Kaye KAPAA, HI
      • about 3 years ago

      We are currently going through this arduous process of trying to get an approval on a loan (which was already pre-qualified for) and now the underwriters are asking for an additional 20k to bring the down payment to 20%. We were approved for a 10% down to include PMI. That being the case, it does not make sense to have to come up with another 20k. We will probably have to forgo this offer to purchase this home that was recently lost and made available through a government foreclosure.

      We sincerely hope that this proposal makes the process much simpler. The financial institutes should realize that this whole mess in the declining of our economy falls in their lap along with the realtors. For their lack of common sense and pure greed.

      Thank you for your effort in bringing this sad situation in to the light. Something should definitely be done.

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