Slow Start to U.S. Plan for Modifying Mortgages
The NY Times says Washington is off to a slow start:
So far, two months after the program went into effect, about 55,000 homeowners have been extended loan modification offers, according to a senior administration official. At the same time, foreclosures continue apace. RealtyTrac reported Wednesday that foreclosure filings reached 342,000 last month, up 32 percent from April 2008. Moody’s has estimated that more than 2.1 million homeowners will lose their homes this year.
Because of the size and complexity of the modification program, the administration has only recently assembled most Read more
Obama Administration’s Housing Fix
Treasury Secretary Tim Geithner announces new steps by the Obama Administration aimed at helping troubled homeowners, reports CNBC’s Diana Olick; with Tanya Acker, attorney/Democratic strategist.
Fixing the Housing Crisis?
Discussing what the administration can do to fix the housing crisis, with Gerald O’Driscoll, of the Cato Institute; Jonathan Cowan, of Third Way; and CNBC’s Diana Olick.
Fed Casts Doubt on Govt Mod Push
The new Federal Reserve paper challenges this conventional wisdom and argues that servicers are not missing sensible opportunities to avoid foreclosure by reducing payments or principal.
The first piece of evidence supporting their claim is that in their sample, among comparable mortgages, loan modifications appear to be equally common among loans held “in portfolio” and loans that are securitized. When banks hold loans in portfolio then property rights reside squarely with the bank and there can be no contracting difficulties. If bondholder suits were really restricting the modification of securitized loans, then there should be fewer modifications of such loans, but the rate of modification is roughly the same.
Default notices drop in April, foreclosure sales up
Home mortgage defaults in California, which had been rising this year, dropped in April, according to a report just released by ForeclosureRadar, an online seller of California default data.
Notices of Default, the first stage in foreclosure, fell by 18% in April from March. There were 42,675 Notice of Default (NOD) filings last month. NOD’s are filed when a borrower has missed several payments. If some kind of agreement is not reached between the borrower and lender over the default, the home is then put up for auction, typically for the amount of the outstanding mortgage.
SC court halts thousands of home foreclosure sales
COLUMBIA, S.C. (AP) — South Carolina’s highest court on Tuesday temporarily stopped thousands of pending foreclosure sales in the state to give homeowners more time to take advantage of a new federal program to help them refinance mortgages.
The injunction — which mortgage experts said appeared to be the nation’s first court-ordered stop for an entire state — prevents judges in South Carolina from finalizing foreclosure sales on properties guaranteed by Freddie Mac, Fannie Mae or any other mortgage company that has signed on to a federal assistance program. Read more
A Short Sale May Not Mean You’re Home Free
Financially troubled borrowers may think that foreclosure or a short sale of their home means their mortgage woes are over.
Not necessarily.
Some homeowners are finding that when they sell their homes for less than the outstanding mortgages — a so-called short sale — their mortgage companies are going after them for some or all of the difference. Mortgage companies are also sometimes taking legal action to recover unpaid amounts after a foreclosure is completed. Read more
Mortgage Cram-Downs Stripped Out of Rescue Bill
Cram-downs are kaput in Congress.
Legislation to give bankruptcy judges the power to reduce home mortgage debt–by “cramming down” the principal–doesn’t appear to have enough votes and will be stripped out of a broader housing bill in the Senate.
The cram-down effort is a major plank of President Barack Obama’s housing rescue, which also offers financial incentives to mortgage servicers to modify loans and allows some homeowners with little to no equity to refinance.
The cram-down measure already passed the House of Representatives as part of the housing rescue. But it faced heavy opposition from the banking industry, and there were signals last week that Senate leaders might discard the measure from the housing bill.
Ocwen Financial exec on loan modifications
Ocwen Financial, one of the country’s largest subprime loan servicers, has taken a beating in recent years from homeowners and community groups for alleged predatory lending and aggressive foreclosing on borrowers who have fallen behind.
The Association of Community Organizations for Reform Now, or ACORN, continues to stage protest rallies in front of the company’s West Palm Beach headquarters, demanding foreclosure freezes and a hold on evictions while more liberal loan modification are worked out.
But Ocwen claims it runs one of the most efficient and innovative loan servicing companies in the country and got in on the front end of the foreclosure problem before it ballooned into a crisis that tipped the economy into recession.
So far, Ocwen claims to have saved some 90,000 homes from foreclosure and boasts one of the lowest redefault rates of any servicer in the country, meaning that after a modification, more of the loans it manages stay current. It also claims to be able to finish the loan modification process in about 21 days.
Read more from the Miami Herald
Ocwen begins loan modifications under Treasury plan
Ocwen Financial Corp., a servicer of subprime mortgages, is among the first mortgage servicers to begin modifying loans under the U.S. Department of the Treasury’s Home Affordable Modification Program.
The program, unveiled last month, allows at-risk borrowers to reduce their monthly mortgage payments in an effort to keep them from losing their homes. It creates a $75 billion loan modification program that would allow “responsible homeowners” to refinance to interest rates as low as 2 percent. Read more
