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SHUT DOWN

Frustration rises over mortgage relief program
Government's latest effort to stem rising tide is mired in problems

After months of dead ends, rejections and runarounds from bank representatives, Dan Binder is still in loan modification limbo.

When Binder lost his job as a media researcher, he and his wife left their southern California home in July 2008 and relocated to North Carolina where he found a new job in the media business.

Since then, he’s never missed a payment on the three-bedroom home in Riverside County, Calif., he said, though it's lost about half its value since he bought it in 2005 for $418, 000. When his wife lost her job after the move, he called his lender, Wells Fargo, to see if the bank could rewrite the loan to lower the monthly payments.

Since then, he said, he’s gotten conflicting responses from multiple bank representatives, one of whom said he was days away from a new loan that was subsequently rejected.

At one point, after assurances that he submitted all the appropriate paperwork, he was told a form was missing. When he provided it, he was told the remaining paperwork was more than 30 days old and he would have to update and resubmit each document. At another point, he said, he was told his file showed a sizable credit card debt he didn’t owe.

After his latest rejection he asked for an explanation.

“They said the notes from the investors (holding the mortgage) said, ‘You spend too much on food, ’ ” he said.

If all this sounds familiar, it's because homeowners around the country have been jumping through similar hoops with the same fruitless results.

Nearly two years after the federal government’s first program to slow the relentless rise in the pace of home foreclosures, the latest attempt, known as Making Home Affordable, is turning out to be another painful disappointment for millions of Americans at risk of losing their homes.

Dozens of e-mails from msnbc.com readers report months of futile effort to modify their loans. The list of problems includes misdirected calls, lost paperwork and conflicting advice from multiple representatives for the same lender.

A Wells Fargo spokeswoman said the company can't comment on individual customer's loans due to privacy restrictions. But she said the company is "working with all of its customers who experience hardships and need assistance with their mortgage payments up the point of actual foreclosure sale.”

“As the government guidelines have changed and as we have gotten more options to help people, there has been some communication confusion that we are working to absolutely get on top of and correct for customers, ” she said.

HUD-approved housing counselors — the frontline professionals trying to help borrowers modify mortgages — have expressed frustrations with a variety of roadblocks, bureaucratic snafus and ongoing confusion about the program.

“Even if (the homeowner) gets hold of somebody, that person might not necessarily understand the complexity of (the program), ” said Helene Raynaud, an executive at the National Foundation for Credit Counseling, an umbrella group that certifies and sets standards for housing counselors. “Counselors end up talking to different people as well, which makes it very difficult. Depending on who they talk to, and the level of seniority and the level of training and the different servicers (they deal with), they get completely different outcomes."

Downward spiral
Despite recent signs of a bottom in the housing market, the pace of foreclosures shows no signs of slowing.

More than 13 percent of homeowners with a mortgage are either behind on their payments or in foreclosure, the Mortgage Bankers Association said Thursday. As of June, more than 4 percent of all borrowers were in foreclosure and about 9 percent had missed at least one payment. A separate report found that more than 272, 000 borrowers were at some stage of foreclosure in July, up 8 percent from June and 55 percent from July 2007, according to RealtyTrac, which maintains a national database of foreclosure filings.

The continuing rise in foreclosures delays any meaningful recovery in the U.S. economy, in part because housing typically leads the economy out of recession. Although there have been recent signs of life in home construction and housing sales, they have been weak and from extremely depressed levels. Every new foreclosed home increases the unsold inventory on the market and cuts into demand for new construction.

Foreclosed homes sold in distressed sales or auctions also push nearby home prices lower. Unless the pace of foreclosures can be slowed or stopped, millions more homeowners who are current on their loans will be forced "under water" — owing more than their house is worth. Those homeowners become new candidates for default. One recent research report from Deutsche Bank estimates that roughly half of all U.S. homeowners will be under water by 2011.

Falling home prices also destroy billions of dollars of consumer wealth as homeowners watch their home equity evaporate. That loss of consumer spending power creates another major headwind to any economic recovery.

The collapse of home prices in high foreclosure neighborhoods also slows economic activity by forcing owners to make tough choices when they sell their house. Readers in high-foreclosure areas report that they're unable to relocate for a new job, buy a bigger house for an expanding family or downsize for a planned retirement because they can’t afford to sell their home at a loss.

When Carol Hardee’s daughter Laura died last year, she faced an uphill battle selling the daughter's Atlanta home, which was purchased in 2000 for $150, 000. In February Hardee got an offer for $140, 000. But with so many foreclosed properties in the neighborhood, the appraisal came back at just $75, 000, and the deal fell through
“There was a house just around the corner from her — it was like a three- or four- bedroom house — that sold for $25, 000, ” she said.

Hardee said she was unable to work out a loan modification with her lender, and the house eventually sold at a foreclosure auction for $100, 000, which still left her with some equity to settle her daughter’s estate.

“I had no choice, ” she said. “I had to sell the house. There were bills to pay with it.”

Frustration with mortgage relief efforts also has led desperate homeowners to fall victim to a variety of foreclosure "rescue" scams. Since April, the Federal Trade Commission has brought 14 cases over these schemes, while 23 state attorneys general and other agencies have taken action against 178 companies. Last year, reported incidents of all forms of mortgage fraud hit an all-time high — up 26 percent from 2007, according to the Mortgage Asset Research Institute.

Making Home Affordable is supposed to offer troubled borrowers two possible solutions. The Home Affordable Modification Program (HAMP) is designed to lower payments on existing loans by cutting the interest rate and stretching out the term. The Home Affordable Refinance Program (HARP) gives borrowers who are current on their payments but “under water” a chance to refinance into a new loan for the same amount, with lower payments.

The program pays incentives of several thousand dollars for each modified loan to mortgage servicers, which often are not the same as the lenders who hold the mortgage.

Lenders and servicers report their own frustrations with the MHA program, which was unveiled by the Obama administration in March with no advance notice to allow these companies to gear up and train workers. As recently as last month, key components of the program were still not in place, and some of the initial guidelines limit the program’s "potential to help homeowners, " according to a July report from the Government Accountability Office, the investigative arm of Congress. The report also found that "a number of HAMP programs remain largely undefined."

Though many servicers had already increased staff to work on troubled loans, they've been overwhelmed by the volume of applications for affordable loans.

“The number of calls coming in is staggering, ” said a representative from one of the 10 largest servicers, who asked not to be identified because she was not authorized to speak publicly. “You’re talking about call after call after call after call after call of people in bad economic circumstances needing attention for their loan.”

Servicers say they also have been frustrated by the tepid response to their efforts to reach out to homeowners at risk of default. The servicer representative who asked not to be identified said her company sent out one round of 45, 000 packages to homeowners believed to be at risk; only 15 percent of them responded.

Staffing is also an issue at the Treasury’s Homeownership Preservation Office, which was set up in November to address the sharp rise in foreclosures. As of mid-July, the office still had no permanent executive in charge, according to the GAO. Eleven positions had been filled with permanent employees and three with temporary workers borrowed from other agencies while 17 positions remained vacant, the GAO said.

The Making Home Affordable program was proposed by the Obama administration and enacted by Congress after two previous government-sponsored efforts, the Hope Now Alliance and the Hope for Homeowners program, failed to make a significant dent in the foreclosure rate. Hope Now, launched in October 2007, has modified several hundred thousand mortgages, although the “redefault” rate from this first round of modifications ran as high as 50 percent.

The Hope for Homeowners program, launched in July 2008, was expected to reach 400, 000 distressed mortgage holders. At first the program was hampered by cumbersome terms and red tape, and only one homeowner got help. Terms were loosened in November without any meaningful impact. This month, the government announced it is rewriting the program again.

The unchecked rise in foreclosures also is destroying the value of assets backed by mortgages that are held by banks and private investors. So far, most investors have refused to take that loss upfront and reduce the loan amounts for homeowners who owe more than their house is worth. Though most major lenders and servicers have signed on to the MHA program, the decision to make a loan more affordable or forgive some of the principal amount is entirely voluntary.

“(Investors) have already suffered this loss: They’ve suffered it on paper, ” said John Taylor, president of the National Community Reinvestment Coalition. “They’re waiting for this loss to begin to dissipate as the housing market recovers. What it’s doing, though, is continuing to exacerbate the foreclosure problems and drag down the economy.”

That deep recession has amplified the pace of foreclosures. When the mortgage market began melting down in late 2006, many of those in default were subprime borrowers and others who were sold adjustable loans that “reset” to unaffordable payments. Now, with 7 million jobs destroyed by the housing-led recession, lost paychecks have become a much thornier problem for groups working to slow the pace of foreclosures.

“The (MHA) program is still not fitted to people who have experienced a severe reduction in income, ” said Raynaud of the National Foundation for Credit Counseling,

That has cast doubt on just how many homeowners may ultimately get help. The White House has estimated that as many as 40 percent of the more than 10 million homeowners who are likely at risk of default and foreclosure could be helped. But the GAO, in its July report, found that estimate “problematic.”

The servicer representative who asked not to be identified estimated that only 20 percent of the loans serviced by her company were good candidates for modification or refinance. Under current guidelines, borrowers must show they can devote 31 percent of their income to the new monthly mortgage payment. Some servicers say that’s too high, and have suggested to the Treasury that the threshold be lowered to 25 percent to qualify more homeowners.

For whatever reason, voluntary efforts to modify loans have proceeded at a snail's pace. As of the end of July, only 9 percent of an eligible 2.7 million borrowers had seen their mortgages modified under the new program, according to the latest Treasury data. Bank of America, for example, one of the largest holders of home mortgages, had modified only 4 percent of eligible borrowers as of last month. Some lenders had not modified a single loan.

That has raised question about the need for tougher measures to determine how aggressively servicers are working to modify loans.

“What was the lever to mandate and hold them accountable?” said Taylor. “I just don’t see that. It keeps returning to what is the fundamental flaw in (former Treasury Secretary Henry) Paulson’s plan and now in (Treasury Secretary Timothy) Geithner’s: that it’s voluntary by nature.”

In its July report, the GAO agreed.

“No comprehensive processes have yet been established to assure that all borrowers at risk of default in participating servicers’ (mortgage) portfolios are reached, ” the report said.

The government's "carrot" approach to stopping foreclosures — offering $50 billion in incentives to servicers to modify loans — was adopted after the financial services industry successfully fought back a powerful "stick" that would have granted bankruptcy judges authority to modify the terms of a mortgage loan from the bench. Judges can do that with any other form of consumer debt in a bankruptcy proceeding but not mortgages.


Congress proposed the so-called “cramdown” provision several times in the past two years, including separate bills introduced in the House and Senate in January. But for now, there are no proposals to revive the bankruptcy provision or adopt other measures to force lenders to modify mortgages.

“At some point we have to realize is that the voluntary efforts haven’t worked, ” said Kathleen Keest, a senior policy counsel at the Center for Responsible Lending. “It’s time to make it mandatory, but that can’t happen without Congress acting.”

Responses

  • T
      Aug 21, 2009

    AG Warns Loan Modification Companies
    Brown Also Ponders Possible Run For Governor

    POSTED: 1:07 pm PDT August 19, 2009
    UPDATED: 1:17 pm PDT August 19, 2009

    SACRAMENTO, Calif. -- California Attorney General Jerry Brown said Wednesday he is "coming after" loan modification companies that are operating on the fringe.The attorney general sent out letters last week to 386 loan modification companies, ordering them to register with his office and post a $100, 000 bond, or face criminal penalties and fines. He said none has posted a bond so far.

    "If you pay these people, you're not going to get it back. They're not financially solvent, " Brown told KCRA 3. "It's more flim-flam than reality."

    Brown said he is working with the Department of Real Estate, which licenses mortgage brokers who are legally able to perform loan modifications, and the State Bar Association, which has oversight over attorneys who also can perform loan modifications.

    The agencies are cracking down on licensees who don't abide by the law. But they are also concerned with unlicensed companies that are doing loan modifications.

    Brown said if such companies would rip off people on loan modifications, they likely have committed other crimes.

    "You can be sure there are other crimes in their background, " Brown said. "We're going to find that, too. I would recommend anybody in this business get out of town, because we're coming after you."

    Brown also said he has a lot to consider before announcing a run for governor. He said a close friend told him the budget is booby-trapped for the next governor.

    "The tax increases -- billions -- are going to go away in two years, " Brown said. "And then there's an obligation to schools, local governments, funds that have been deprived of their money. The state has to pay it back. The next governor is going to be booby-trapped with less tax funds and more obligations. Before I decide to get into that booby trap, I want to reflect on that."

    0 Votes
  • T
      Aug 21, 2009

    Leading Mortgage Blog Blown Mortgage Expresses Hope of Housing Recovery
    Blown Mortgage which offers one of the most trusted free home loan modification and independent mortgage industry commentary online has said that the mortgage industry is on a path to recovery but it.Blown Mortgage which offers one of the most trusted free home loan modification and independent mortgage industry commentary online has said that the mortgage industry is on a path to recovery but it is still sometime before it stabilizes entirely. Since its launch in 2006 after the credit crisis started the blog has been one of the most read blogs across the United States. Mr. Daniel Logan, editor of Blown Mortgage said that their blog has received hundreds of thousands queries on the housing market and answered them through articles, blogs and responding to individual comments. The mortgage modification initiatives of the United States Treasury are helping to stabilize the housing market in a big way. Mr. Logan emphasized the fact that the mission of the company is to provide genuine solutions and responses to American homeowners. Every member of the editorial team is experienced in the loan modification service and gives valuable and genuine solutions on the subject. This is one of the reasons why Blown Mortgage is quickly moving towards becoming the primary source of loan modification information on the Internet.

    Mr. Logan mentioned that the sole objective of Blown Mortgage is to give peace of mind to citizens so that they can start their day with a lesser burden. Apart from mortgage, the site also gives valuable information on consumer credit relief. Blown Mortgage is not a service provider for loan modifications. Commenting on the root of the credit and housing problem he said that Americans had taken mortgages beyond their means to profit from the steep rise in real estate prices. However, like every graph rises and falls the real estate growth could not sustain the abnormal rise, and fell steeply. The drop took many of leading Wall Street giants such as Lehman Brothers and Bear Sterns along with it. It just stopped short of drowning the pillars of American economy such as Citigroup and AIG.

    As a step towards stability of the country, the administration moved in quickly and was supported by banks which were not in such a bad shape. He said that Blown Mortgage and its team of researchers are focused on offering advices and tips to help citizens to overcome their individual problems. The team has developed an excellent knowledge base on loan modifications, loan refinancing and mortgage modification which is being used extensively to solve credit problems. Blown Mortgage has already received its share of bouquets being noted as one of the Top 3 influential Mortgage Blogs in the industry by Inman News.

    The team at Blown Mortgage is one of the best with recognized writers and researchers such as Jay Hammond, Constantine Von Hoffman and Morgan Brown taking the pen. The company plans to expand the team with new writers and researchers joining the team. He said that a marketing campaign has been initiated to make the blog more popular among citizens so that they can benefit from the credit related information. With the new presidency and a bigger financial.

    0 Votes
  • T
      Aug 21, 2009

    There are other companies out there who claim they can do a loan modification and then actually can't help the homeowner and find themselves even more underwater since they had to pay that particular company a processing fee. A loan modification, also called debt restructuring, with an attorney can significantly make headway for clients at a faster rate and faster responses. I have personally witnessed people trying to save a buck here and there and do it themselves. Yet, they discover six months later they are still no closer to a modification agreement and are still chasing down different office staff in the lenders office.

    Some homeowners that are struggling to make their mortgage payments or close to foreclosure may choose to employ a real estate attorney or a loan modification company rather than doing it ion their own due to the fact that an attorney has a significantly more positive impact and results, when ordinary individuals have failed. The lender has to respond to attorney in a timely fashion otherwise there are penalties, possible loan rescission, and expensive legal fees. They don't want this in addition to a foreclosed property. Once an individual fails to negotiate with the loan servicing company, it is much harder to use an attorney later on to stop a foreclosure due to time constraints and the lender having your current information. Getting to the right person or persons within the mortgage lenders' loss mitigation department can be difficult to impossible at times. Some have stories that their documents simply disappeared like the loss mitigation has a magical genie on staff. Mail and faxes may suddenly become misplaced, agreements moved to different departments, etc. Their objective is to collect for their investors. You are not the client to them. The investors are.

    Remember the lender is mainly trying to collect delinquent payments, not give you a break. The loan loss mitigation area is not in the business of offering each person that requests 3.00% fixed rate for 5 or 10 years or reduce the principal loan balance down by $100, 000. Although, the odds increase when using qualified loan modification companies with an attorney. If they are done at all, it is based on the individual file and must be properly negotiated to achieve positive results. When one uses the loan modification services from a company that has an attorney on staff, they are usually going to have a better outcome.

    A loan modification is a long term solution, modified forbearance agreements are designed by the lenders to just get paid. Of coarse they will negotiate with you to get caught up, requiring a portion of the late payments to be paid up front to reinstate the loan or to stop foreclosure.

    Be Careful of Loan Modification Company without an Attorney

    There are many loan modification companies also known as loss mitigation companies marketing their success stories, refunds, and principal reductions. If they guarantee a principal reduction, then you need to do business elsewhere because that simply cannot be guaranteed period. It may be a strategy within the loan modification company's marketing but there is no guarantee!
    If they say refunds, make sure they disclose the refund amount if their processing department deems it not to be a favorable file for a loan modification.
    I will agree that not every company out there is untruthful however most of the salesman are working just to make a sales commission. You should work a loan modification company that has attorneys, paralegals and experienced bank negotiators to personally handle files that come in.

    What is a Typical Loan Modification?

    A standard loan modification puts the borrower into a comfortable and long term ability to make their new payment. Modifying the mortgage terms of the current loan can involve a very low rate that is fixed for a period of 3 to 7 years then systematically rise to the current market fixed rates. In certain situations, the lender may also choose to decrease the principal loan balance or wipe out part or all of the second lien if it is introduce properly with documentation. In summary, a loan modification should be favorable solution to both the homeowner and the investor.

    Article Directory: ezinearticles.com

    0 Votes
  • T
      Aug 21, 2009

    Countrywide's Court Loss Complicates Mortgage Modifications

    There have been numerous reports about how poorly the Obama administration's mortgage modification program has been doing. I've written a few posts about servicers having trouble cooperating or not wanting to. Another enormous wrench has just been thrown into its gears: now even when banks want to make modifications they might not be able to. A federal court has ruled this week that Countrywide, formerly the largest mortgage company but now owned by Bank of America, cannot hide behind the foreclose prevention legislation if mortgage-backed securities (MBS) investors try to prevent the modification. This is pretty significant news, since so many troubled mortgages are part of MBS.

    By now most readers probably know what MBS are. After all, President Bush explained them during a prime time press conference last fall. Many of the currently underwater mortgages were packaged as securities and purchased by investors. Generally, the legal documents associated with those securities do not allow banks to alter the terms of the mortgages without the consent of the investors' who hold the MBS. Countrywide thought that this year's foreclosure prevention legislation allowed them to modify mortgages anyway despite what investors might think. The recent court ruling indicates otherwise.

    Here's some detail about the ruling, via Gretchen Morgenson of the New York Times:

    Bank of America, which took over servicing of the investors' loans when it bought Countrywide in 2008, is defending the case. It argued that the matter belonged in federal court and that any contractual obligations to repurchase modified loans were trumped by the Helping Families Save Their Homes Act of 2009. Under that law, servicing companies that agree to modify loans receive some protection from liability arising from the loan changes.

    Judge Holwell ruled that the immunity granted under the legislation did not prevent Countrywide's investors from trying to enforce their rights under the mortgage securities contracts. The investors must prove that Countrywide's pooling and servicing agreement covering their loans does indeed require it to repurchase mortgages the bank modifies, the judge said, ruling that the case belongs in state court.

    Shirley Norton, a spokeswoman for Bank of America, said it was reviewing the order and considering its options. "The court did not rule that the safe harbor is inapplicable, " Ms. Norton said, merely that it did not fall under federal jurisdiction.

    That may be true, but it certainly looks like a win for investors. They also like their chances:

    "This is a first step in a decision by a federal judge that says even after the servicers' safe harbor was enacted and even after all the wrangling in Congress, we are still going to allow people to enforce their contract rights when it is appropriate, " said Owen L. Cyrulnik, counsel at Grais & Ellsworth in New York, which is representing investors in the suit against Countrywide.

    Investors sued Countrywide because they did not want to be forced to take losses associated with drastically reducing interest rates or principal on these mortgages to avoid foreclosures. Some might argue that these modifications would have made investors better off, as massive foreclosures in this real estate market might produce greater losses than modification efforts. Investors must have disagreed, however.

    Given the vast number of mortgages that are part of MBS, this ruling may fatally wound Washington's hopes for preventing millions of foreclosures if it stands.

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    Comments (4)
    Claudius August 20, 2009 11:26 AM

    "Investors sued Countrywide because they did not want to be forced to take losses associated with drastically reducing interest rates or principal on these mortgages to avoid foreclosures."

    That's the crux of the matter, and why they sued. The holders of the MBS are part and parcel of the whole fantasyland financial system we've jury-rigged over the past year. If the underlying mortgages are modified, then the MBS will be, in effect, "marked to market" at a far lower nominal amount than the investors paid for them during the boom. In other words, they'd have to recognize and eat their losses.

    The economy cannot truly recover until the financial system and credit markets are cleared of their bad loans and assets. In order for that to happen, people have to eat their losses. So far, the government has done just the opposite, through a massive infusion of borrowed money. This can't last forever, and when it ends, the crash will be catastrophic.
    Reply
    newdealanne August 20, 2009 1:09 PM

    I hate to be a simpleton about this, but am I missing something? The investors took a risk. It didn't go in their favor, or in ours. They toppled our economy. And now the best way out of the mess they helped caused is if we allow the modification and they have to eat their losses. What's the problem here?
    Reply
    ed (Replying to: newdealanne) August 20, 2009 1:28 PM

    What statistics there are show that most of the modified mortgages have defaulted a few months later. The people simply do not have the money to pay even the modified amount.

    Meanwhile there has been an uptick in home sales which many have attributed to people buying foreclosed properties.

    The plaintiffs, might think they'd do better from the foreclosure sale rather than the restructuring. They may also desire to "get it over with" - meaning that they would rather have the foreclosure, and the foreclosure sale, now, rather than wait for a later foreclosure, based on a lower note value due to the restructuring.
    Reply
    chip August 20, 2009 6:56 PM

    what's the problem here?

    no problem - it's called contractural law - last time i checked we were still a nation of laws

    if the investors don't want to bite the bullet that's their perogative

    0 Votes
  • G
      Sep 02, 2009

    HAMP – The Home Affordable Modification Program is NOT working. To date, only 235, 000 loans have been modified under this program, while funds have been set aside to modify up to 4 million loans. To find out if you technically qualify for a modification based on HAMP guidelines, click here to access the 5 question quiz on the government website.

    The banks have all kinds of excuses why borrowers do not qualify for this program. But the number 1 excuse banks are using is that the guidelines are too rigid. For instance, your mortgage payment cannot exceed 31% of your gross income. First of all, loans were not originally underwritten with this 31% number, so technically this makes almost all borrowers eligible for HAMP. But loan servicers are saying the formula is too narrow and does not take into account all the other debt borrowers have or are piling up during the economic slowdown. CitiMortgage, which services one out of every ten mortgages in the U.S., says the formula is the #1 reason why borrowers are being excluded from the program.

    Some banks are using the excuse that they do not actually own the loan, but only service it, so they cannot modify a loan they do not own. This is a tired excuse that most of the major news networks have already covered. Servicers CAN modify loans, regardless of this excuse they are throwing around.

    Some servicers are coming up with their own plans for modifying loans. From what I am hearing from my readers, and from other media reports, most of these “plans” are a joke, intended to benefit the lenders, not the borrowers. Here's an example of one such "plan. This lender, Carrington Mortgage is switching people out of fixed rate mortgages into variable rate mortgages, and while deferring delinquent payments, and adding them to the principal, (AND still reporting the borrower delinquent to the credit bureaus), they are putting this borrower at the mercy of the market. This is a stop gap measure at best, and another money maker for the lender in the long run.

    Other lenders are allowing borrowers to stay in their homes as renters, while following through on the foreclosure process. This sounds to me like the banks protecting only themselves, while borrowers are really taking it on the chin. Sure, you stay in your house, but the bank owns it, literally can throw you out at their whim. In the meantime, the bank does not have to put the house back on the market during this depressed valuation cycle, or leave it vacant, because they have a renter in there to maintain the property, and carry the debt.

    Still other lenders are putting people into modifications on a “trial basis.” While we don’t have details on these “trials, ” what we do know is that as long as the bank “modifies” the loan, the collect government incentives, unless the house is sold. This explains allowing the now non-owner of the house to remain in the property. Technically the house has not been sold? But it has – the bank owns it now, not the borrower.

    What is clear is that the guidelines for the HAMP program require drastic revision, or it will never work. I am not advocating that all delinquent borrowers should get a 2% modified rate for the life of the loan.
    Perhaps dropping the rate to what is truly affordable, given all a borrowers current debt, and current income, for a period of time, perhaps 2 years, and then gradually increasing the payments to a reasonable market level of 5% perhaps for the remainder of the loan, makes more sense than the “innovation” that banks are using now.

    In any event, the push is on to get banks to modify loans, so the government is again handing out money to banks to make this happen. The banks slated to receive the largest sums of money for this program right now are Countrywide (now owned by B of A), Chase, Wells Fargo, and Lehmans. I’m sorry, but aren’t most of these the very same banks that just reported hundreds of billions of dollars in profits last quarter? When do we stop rewarding banks for their failures and poor management, and start taking care of the people in this country?

    Today is September 1. Congress is back in session, and there is word that HAMP will be addressed again. Maybe they will come up with a plan that will actually work this time?

    CNBC reported this morning that banks are easing up on "short sale" approvals to try to assist homeowners facing foreclosures.

    0 Votes
  • L
      Sep 11, 2009

    Obama administration's $50 billion mortgage relief program gains traction

    The Obama administration's $50 billion mortgage relief program is finally picking up speed after a sluggish and disappointing start.

    Nearly one in five eligible homeowners has been offered help, the Treasury Department said Wednesday.

    Launched with great fanfare in March, the Making Home Affordable program had been slow to get going. But more than 571, 000 loan modification offers, or 19%, have been sent to nearly 3 million eligible

    homeowners, up from 15% at the end of July.

    More than 360, 000 borrowers have three-month trial modifications, which are supposed to be extended for five years if the homeowners make their payments on time. Nearly 50 mortgage companies are now involved in the program, and 500, 000 loan modifications are expected to be in place by Nov. 1.

    Yet housing advocates still say getting approved is a time-consuming, bureaucratic nightmare

    Read more: http://www.nydailynews.com/money/2009/09/10/2009-09-10_obama_administrations_mortgage_relief_program_gains_traction.html#ixzz0QpCFJzRE


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