EDITORIAL: Big lenders treating borrowers shabbilyHomeowners are being treated shabbily by large national lenders that purchase locally originated mortgages.
“Foreclosure” is a legal process we never want to experience. But it’s a growing problem in Douglas County, as The Telegram reported in its weekend edition. Since the mid 1990s, lenders have filed a growing number of legal proceedings to repossess homes from people who can’t pay their mortgages.
In response to the story, readers have called with additional information. It has a common theme: Homeowners are being treated shabbily by large national lenders that purchase locally originated mortgages.
People in that situation have little recourse, providing the lender isn’t violating the law. But many home buyers, particularly those entering the market for the first time, don’t understand their loan may be sold to an uncaring national company located far from Douglas County — or for that matter, sold more than once during the term of their mortgage.
The practice sometimes can be avoided if a local bank agrees to retain a loan throughout its term. But that option, if it’s available at all, may only be available at a higher interest rate. Many people ignore the opportunity.
For most people, the sale of their mortgage presents only minor inconvenience. For instance, payments can’t be made locally, and if you have a question, anticipate communicating with a call center representative (never the same one twice) who speaks broken English.
That scenario degenerates for those facing default. The lack of a local relationship speaks most loudly. To a poorly trained phone clerk at a national mortgage house, you’re just a face in the crowd from Superior (where?) who has fallen to deadbeat status.
It’s a scenario that begs for federal intervention. People need more time to work out their financial problems with mega-banks. Everyone will be better served if borrowers have a chance to work out their financial challenges rather than slide into homelessness and bankruptcy.
Meanwhile, Congress must take a close look at proposed banking system regulations, which are long overdue. A free marketplace generally is a better option than one that is highly regulated. But recent American experiences with greed have shown big financial institutions and greed make very poor decisions that trickle down, robbing average people of everything from retirements to their shelter.