Texas consumer housing advocate and attorney Robert Doggett is on a tirade.
Not against the usual predatory lenders or slumlords but against the Texas Foreclosure Prevention Task Force, a group of home lenders, government organizations and non profits providing advice to homeowners who are behind on their mortgage payments. These are people who represent themselves as the good guys trying to help borrowers save their homes.
What has Doggett upset is the selective nature of the advice these groups are providing homeowners, in particular the refusal to counsel homeowners about the option of bankruptcy to save their homes.
Doggett, a member of the Texas Foreclosure Prevention Task Force himself, quotes a representative of Fannie Mae serving on the task force saying, “We don’t want to mention bankruptcy because it is so detrimental to borrowers.”
Oh really? Is that why this government funded, state task force is restricting advice about options to help Texans save their homes from foreclosure?
On his blog, foreclosurebuzz.org, Doggett counters…
Isn’t bankruptcy one of the very few real tools borrowers have to prevent a foreclosure and force a lender to accept a payment plan for the arrearages? Yeah, pretty sure. Lenders hate when borrowers file for bankruptcy because it transforms borrowers from beggars, hoping to work out a deal, to debtors with rights, and it provides the supervision of a judge who is ready to enforce those rights.
So it turns out that the comment made in a state task force meeting quoted above is just the tip of the iceberg. Lenders are perfectly willing to do anything it takes to prevent borrowers from knowing their rights, including deceiving the public, while many others are at least knowing accomplices. Omitting the bankruptcy option from any conversation on borrower’s rights is not just an oversight; it is intentional — and it is wrong.
Doggett says that home lenders are controlling the advice given homeowners, through government funded initiatives such as the Texas Foreclosure Prevention Task Force. The lenders are censuring the advice to serve their own financial interests over that of Texas homeowners.
He is correct and this situation is wrong.
Home lenders have much to contribute to the process of counseling homeowners but they are just one voice and have a vested interest in which options that homeowners pursue in saving their homes. Homeowners must be informed fully about their options, not just the options that lenders prefer. As Doggett notes…
Of course bankruptcy is not appropriate in every case, but it could be especially helpful when a lender will not agree to a reasonable payment plan. Having it out there as a possible tool for borrowers encourages lenders to make reasonable payment plans with other borrowers. Bankruptcy will adversely affect a credit report, but so will a foreclosure.
Bankruptcy is merely a litmus test. If the lenders can keep this option out of hundreds of guides and websites at all levels, imagine what else they have influenced.
