Is There a (Juris) Doctor in the House?

There's a 60% default rate associated with modified mortgages.

November 15, 2010
/ PRINT / ShareShare / Text Size +

Potential for gridlock

Credit unions have largely escaped bad press. But the potential is there.

At a recent National Credit Union Roundtable for Directors meeting in Boston, the National Credit Union Administration’s Tim Segerson reported that real estate loans represent almost 55% of the credit union portfolio. Though only 3% of credit union first mortgages were delinquent two months or more, one-third of homes today have negative equity.

Real estate modifications have gone from $2 billion to more than $6 billion, and now represent 2.4% of total real estate loans. While that’s not a huge number, there’s a 60% default rate associated with modified mortgage loans, Segerson said.

Today’s foreclosure controversy stretches beyond GMAC Mortgage, JPMorgan Chase, and Bank of America. There are dramatic tales almost everywhere, including the mortgage processor whose employee reportedly executed 400 affidavits a day for the lender without reading or verifying that the information was correct. Attorneys general in at least 17 states are investigating improper foreclosure practices.

In oversimplified terms, millions of mortgages have been shipped around the global financial system—sold and resold—without the documents that traditionally prove who legally owns the loans and the properties.

When and if these loans become troubled and lenders seek to seize them, judges are beginning to question who really owns the title.

For struggling homeowners trying to avoid foreclosure there might be standing to say some lenders have been less than forthright in their dealings. But will it stop the foreclosure process or just delay it? What’s the borrower’s recourse?

For some lenders—most notably banks—there’s a question of whether past and present foreclosures are valid. For the fragile housing market there’s potential for years of gridlock and continued uncertainty in an already wobbly market.

Next: A second TARP?

Post a comment to this story


What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive