Scotsman Guide - December 2010 Residential Edition

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By Drew Kessler
Managing director
KMG Mortgage Consulting

Dealing with the Broken Foreclosure System
Build borrower confidence by helping those trying to keep their homes

It now seems clear that many lend- ers and servicers have conducted foreclosures improperly, often signing papers without due process. In fact, in many ways, the system for reclaiming homes from nonpaying borrowers seems to be crumbling before us.

Mortgage brokers can help by becoming a resource for those in need, some of whom face daunting challenges from lenders and servicers.

Last summer, for example, a lender began foreclosure action against borrowers who were given a $300,000 loan two years prior. Less than a year after assuming the loan, one of the borrowers lost his job. Not long afterward, the borrowers started to fall behind on their mortgage payments.

They contacted their lender, ex-
plained the hardship and asked if
anything could be done. Their efforts
failed. Additional efforts involving a
modification facilitator and an attor-
ney also were unsuccessful. During the
year-plus that passed between when
the borrowers announced their problem
and when the lender filed the action to
foreclose, interest payments mounted.

• Offer• to• review• the• documents former clients receive from their mortgage servicer.

• Develop• a• network• of• attorneys to whom you can refer troubled borrowers.

• Stand•up•for•past•clients, especially those who may face some or all of the issues described in the example above.

By becoming a resource for those in need, brokers can build client confidence and help fix today’s fractured foreclosure system. •

Drew Kessler is the managing director of KMG Mortgage Consulting. He is president of his local board of Realtors and is the first loan officer in the board’s history to achieve that honor and position. Kessler appears regularly on Fox Business News for his expertise on the housing industry, and he publishes a weekly housing report at drewkessler.com. Reach him at drew.kessler@kmgmc.com.

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