KSL reports that ModifyUtah, the mortgage modifier company based in Utah County, has closed it doors and is no longer servicing clients. The article bemoans the loss of the company and laments all those homeowners negatively affected who may loose their homes now to foreclosure.
Why did ModifyUtah go out of business? Here is what the story says:
According to a letter from the firm's attorney, Paxton Guymon, Modify Utah ceased doing business for several reasons, including "a significant portion of (its) customers have failed or refused to pay … for services provided, recently imposed restrictions impeding the company's ability to process or receive payments and lien holders unwillingness to work with loan modification companies.The Federal Government's loan modification programs were an exercise in futility. I know many people who applied for the program but I don't know any person that successfully modified their loan. It was a bureaucratic mess and most of the folks couldn't qualify for the modification because their income was still too low for the payments. This might also explain why customers didn't pay or wouldn't pay for services rendered.
That is why foreclosure is the best answer to this dilemma. By wiping out the bad debt, house prices can be reset to affordable prices and those folks who lost their homes in the process can rent a home of equal caliber for less that their previous payments. Foreclosure brings house prices (and their accompanying payments) back into the realm of affordability. The situation may be stressful in the short term for these families but in the long term they will be better off. This situation should also be a warning to all of us about the perils of excessive debt.
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