If you thought mortgage lenders would humbly admit that they failed in their efforts to prevent foreclosure , you probably gave them too much credit. Mortgage companies Wells Fargo, JPMorgan and others have balked at the assertion that they have failed in their foreclosure prevention efforts insisting that sending out thousands of letters inviting homeowners to foreclosure counseling is the same as actually providing them the debt relief they need.
While big banks and legislators often scratch their heads at the fact that many homeowners facing foreclosure don’t go in for counseling, bankruptcy professionals already have it figured out. Most debtors facing foreclosure are also facing a litany of other financial and credit problems which a mediocre (at best) foreclosure prevention program does not address.
What good is it to attend a foreclosure counseling session if you have no job, owe tens of thousands of dollars in credit card debt and have the IRS breathing down your neck? Not much good when it doesn’t address all of those financial issues. That’s why many homeowners facing foreclosure simply abandon their homes and/or file bankruptcy so they can discharge most or even all of their debts.
A bankruptcy filing, especially for homeowners who are unemployed and have been without a job for an extended period of time, is often the most practical solution to their financial problems. But the reality is that even if a homeowner really needs to consider filing bankruptcy, the foreclosure counselors are not empowered to give that suggestion to the debtor.