Many of you probably saw the story on AZCentral touting the government's Homeowner Affordability and Stability Plan (HASP) as the reason for foreclosures being down and banks responding to homeowners in trouble. Personally, I believe it has much less to do with the plan and more to do with banks finally having the infrastructure to deal with the problem.
The AZCentral article is an example of a reporter being too lazy or ignorant to understand an issue. The result is an article that simply does not reflect the facts. Judging by the 10+ pages of comments from readers, I don't think I am alone in these feelings.
The HASP has been helpful, but it is not the main reason banks are being more responsive to troubled homeowners. I do believe Obama's message opened the eyes of people facing foreclosure and helped prompt some into action.
I believe much of the change has been due to the banks finally having sufficient staff and systems in place to handle the work load. Look at it from a business standpoint.
Let's say you operate a car repair shop and suddenly your business increases 20% in two months. You probably respond by working your staff harder and trying to handle the load within the systems you have in place. Then the work load increases another 300% in the next 6 months. Your waist-deep in work now. You can't keep up with the work and you don't have the time to find solutions. This is what the banks faced in 2008.
At one point, bank management recognized the severity of the problems and started tackling them. Banks, traditionally, are not rapid responders. The problem has to be studied, departments have to learn to share data, solutions need to be evaluated, reviewed by attorneys, reevaluated and so on. It's a slow process and the solutions were often outdated before being implemented... a bit like our freeway system updates. In late 2008, new systems are in place, additional manpower hired/trained, computer systems bought, software reconfigured and they, the banks, are in a position to better serve their customers.
In February 2009 the politicians step in, create pretty policy and announce how they will get to the bottom of this problem and solve it.
As Realtors we witnessed the change in bank performance regarding the sale of foreclosure properties. Last Fall it we often waited as long as three weeks to get a response to an offer made on an REO home. Today, the response time is 24-48 hours. The reason is simple... they have systems and personnel in place that can better handle the workload. They are still underwater but not like they were a few months ago.
In conclusion, let's give credit where it's due. The Government's policy would have had little effect if the banks had not put in place the people and procedures to better serve the public.
Gene Urban
The Urban Team at Realty Executives
602-234-5777
