According to the president of the Utah Bankers Association (UBA), Howard Headlee, it is “virtually impossible” for homeowners in the foreclosure process to renegotiate the terms of their loans. This statement was made in response to state legislature attempts to stem the “foreclosure wave” in the state, and Headless believes that as long as home loans are “almost immediately sold by the original lenders and might be resold many times over” that trying to renegotiate a home loan is “kind of like unscrambling an egg.” Not surprisingly, these statements were made in conjunction with bank opposition to efforts on the legislature’s part to require mortgage holders to identify a single party with whom a homeowner could work in order to modify their loan.
As recently as December, about 3 percent of all Utah households were one month behind on their mortgage payments, leading legislators to fear that a statewide foreclosure wave is on the way. At the time, experts predicted that home prices would stabilize in 2011 in the state, but with new information indicating that the national housing market could be heading toward a certifiable “double dip,” the state is hoping to stave off such an event at least on the local level. Unfortunately, renegotiation of mortgages is simply not an option, according to Headlee, who points out that most mortgages end up fractured thanks to multiple resales that lead to myriad investors owning a very small portion of any given loan. Modifying mortgages requires “herculean effort,” he said, and that given the extreme unlikelihood of this type of option for most mortgages, lawmakers need to have “a recognition that there are some [mortgages] for which modification is not an option.” He added that this category included almost all existing mortgages.
Do you think that lenders should be forced to “unscramble” the mortgage egg?
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