Advice for buyers and sellers, from Justin Ruzicka

Mortgage Modifications or Loan Modifications ‘A Failure’

I love living in Lee County, Fort Myers Florida. It is a great community from beautiful waterfront homes in Cape Coral to great condos along the white sandy beaches of Fort Myers Beach to Bonita Springs. What I really enjoy about this community is in less than 7 days, you can have two polar opposite headlines in the same industry. January 21, 2011 News-Press writes, “Lee County homes sell; prices rise.” Then on January 27, 2011 News-Press write, “Mortgage Fix Program ‘a failure’.” It was great to hear that 15,207 homes sold in Lee County for 2010. That’s a good year by anyone’s standard. However, I want to mainly focus on the abysmal failure the Government Loan Program called HAMP, was, and furthermore how I was a very very large opponent to it. My business of short sales naturally would make me an opponent to a loan modification but also it just doesn’t make sense financially. In fact on January 16, 2009 I wrote a blog title, “Loan Modifications, helping or hurting Americans?” I argue of course it was hurting Americans. SO, as I stated then it was bad, I would not be inclined to change my argument. The best way I can explain it is like this. Think of a loan modification like this….Say Ford is offering the F150 Pickup for $10,000, You wouldn’t go into Ford and Say, listen if you give me great terms on a loan I will pay you $15,00 for this truck??? Would you? NO, but that is what you are doing when you are completing a loan Modification, you are saying, my house is only worth $100K today but since I have a loan for $250K then I will modify my payment so I can stay in the house for $250K, and hope that someday pay it off. Staggering statistic, over 60% of Loan Modifications go into Foreclosure with the First year of payments. Worse is that lenders are playing a very tricky game with home owners. They are “modifying” the loan in a Temporary Payment Plan, it is temporary for 90 days, or what would be equal to 3 months of payments. Then on the 4th payment they are not accepting it and moving forward with foreclosure immediately. Yeah, this has happened to people I know personally, and not just one person, but many. The game, however is smart on the banks standpoint. Banks are amazing and squeezing every last penny out of there “customers.” Lets look at all the benefits to this game for the bank; The court systems are backlogged with foreclosures so the bank knows time is not on their side, so if the bank can “work” with the home owner they get 3 months of payments plus usually a Huge Sum of money to “modify” the loan, in the cases I know the “modified” payments were 125% of the previous mortgage payment. This is legal robbery, and it is unfortunate how many people it has hurt in the process. If you want to read more, definitely look at my archive from December 2009.

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Justin Ruzicka, Realtor
Justin Ruzicka, RealtorThe House Guy
Much of my real estate career has been in buying, repairing, then selling the properties for a profit. I work for specific investment groups doing this, as well as manage a personal portfolio. The other 50% of my business is helping my neighbors, I have helped dozens of Families buy or sell their home.

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