The Bankruptcy Lawyers Blog

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Donald Trump has done pretty well for himself financially, and that might equip him to give advice to those aspiring to become millionaires, but it appears that he's a little out of touch when it comes to issues like everyday people facing mortgage foreclosure.

Recently, The Donald decided to take a moment out to give those folks some advice on the Trump Blog, and it boiled down to this:  talk to your mortgage lender.

Trump did offer one piece of advice that makes sense, telling homeowners facing foreclosure to stay in their homes while they attempted to work something out.  But the rest of the post boiled down to a statement that the banks don't really want to foreclose, and will be willing to work with you.

It's an idea that makes a lot of sense in theory.  Why WOULD a bank want to spend the money to foreclose on a home—especially one that's worth less than the outstanding mortgage balance—and then have to turn around and sell that home, possibly at a loss, in order to recoup any of the debt on that house?  It seems, though, that when it comes to those struggling financially, Trump is stuck firmly in the realm of the theoretical; real life experience simply doesn't match his conjecture.

While Trump is cheerfully suggesting that it's easier to work things out than you might imagine, an NPR headline tells us that the Federal Reserve Chairman is urging banks to help borrowers more.   And the California Reinvestment Coalition (CRC) has just released a report tellingly titled The Growing Chasm Between Words and Deeds.  That study was based on the reported experiences of mortgage counseling agencies during December of 2007—a time during which podiums and news reports across the country were littered with positive statements about the great strides lenders were making toward working effectively with borrowers. 

Those agencies reported both foreclosures and short sales as "very common" outcomes during that period, and indicated that the concessions lenders were willing to make were often so short-term as to merely forestall the inevitable.

While this information is unsurprising to bankruptcy attorneys, who see clients every day who have tried and failed to work with their mortgage brokers, it seems that on this issue, one of the nation's most successful businessmen has been getting his financial information from press releases.