Out of frustration, I went toe-to-toe with one of the major investors at the Mortgage Bankers meeting in San Francisco, where I even brought up the fact that they had just received billions in TARP money and weren't going to use any of it for the Hope for Homeowners program when this gentleman said something to me that stopped me in my tracks
Irvine, CA (PRWEB) April 10, 2009
Government programs to help homeowners don't work. So says Rick Arvielo, president of New American Funding, a fully delegated FHA lender that works distressed borrowers through successful write-down negotiations and loan modification activities. Borrowers have inundated the company with requests for the Hope for Homeowners product since Congress's creation of the program in October 2008.
"The government's desire to provide financing to borrowers in distress or even the appetite of investors to own those loans mean very little unless every group or organization in the process is willing to participate. One missing step will derail the whole strategy," Arvielo says. "The major banks that retail loan centers, independent brokers and smaller interim banks rely on as a necessary step in the funding process do not have any desire to fund and own the responsibility of collecting payments from borrowers that are clearly in distress."
Even though a borrower's "loan" amount is ultimately guaranteed by Fannie, Freddie or FHA, the responsibility for the payment collections falls squarely on these major banks. Due to current rising default rates, the banks simply do not want the added workload, risk and upfront cost associated with borrowers that have displayed a pattern of not paying their mortgage, regardless of the reason, Arvielo says.
Can you blame them?
Arvielo says he was very frustrated when Hope for Homeowners was introduced. New American Funding was anxiously anticipating a windfall of business opportunity when the guidelines were first released, but when Arvielo called his contacts at all of the large institutional lenders -- on which all mortgage banks rely to sell loans -- he was met with zero interest in cooperating with the program.
"Out of frustration, I went toe-to-toe with one of the major investors at the Mortgage Bankers meeting in San Francisco, where I even brought up the fact that they had just received billions in TARP money and weren't going to use any of it for the Hope for Homeowners program when this gentleman said something to me that stopped me in my tracks," Arvielo says. "He said, 'If we would agree to buy these loans from you, where you are on the hook for the borrowers' first four payments, the typical timeframe for a mortgage bank, or you would have to buy the loan back…what would you do?' Admittedly, I am no longer an advocate for the program."
Arvielo says the next time money and time is spent creating a program to help homeowners, the government needs to apply a little discovery to the systemics of actually originating and funding loans. The government might also do well to get the major banks to "sign off" on the program and agree to some level of support, Arvielo says.
"The Hope for Homeowners program should have included a 'First payment default' guarantee and money earmarked for the servicing of these loans. Then, it might have had a chance," Arvielo says.
For more information on New American Funding or president Rick Arvielo's position on the Hope for Homeowners program, visit http://www.newamericandirect.com.
About New American Funding
New American Funding is a HUD approved FHA direct lender. The company staffs an expert team of loan specialists that can help homeowners get out of an existing adjustable rate mortgage and into an affordable 30-year government insured loan. In addition, New American Funding staffs a full team of loan modification specialists to assist homeowners in saving their homes from foreclosure.
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