Many say their servicers are not responsive — losing paperwork
CNN – Borrowers and housing counselors, however, have been complaining about the program since it began.
This is the common reoccurring theme that our law firm has experienced since early 2007 when we first started performing loan modification for our clients. If this was easy then we wouldn’t have so many foreclosures and everyone would be getting the help they deserve.
But you and I know that simply is not true.
Mortgage servicers do not have the manpower to handle the volume of delinquent borrowers and thousands of homeowners are simply getting lost Read more
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.
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.
Senate Passes Loan Modification Bill
The US Senate on Wednesday passed legislation that seeks to prop up the housing market by giving mortgage servicers freedom to modify problem home loans without fear of investor lawsuits.
The bill also revamps the Hope for Homeowners programme aimed at helping borrowers remortgage and raises the Federal Deposit Insurance Corporation’s coverage on individual bank accounts and its ability to Read more
2nd loan modifications and the OBAMA PLAN
Well today the news broke about President Obama ‘s new new stimulus plan, or as they put it his “expansion” to the foreclosure prevention program. Previously the President and all the supporting cast lined up to explain how with $75 billion, the housing crisis could be solved. Lenders would modify loans in mass and borrowers would finally get the relief they need. Fast-forward a couple months and now we are seeing lenders continuing their reluctance with a few bright spot exceptions.
The “expansion” deals with second mortgages. The lenders prompted by the first go round had a valid point. “Why should we modify our loan, when the 2nd gets to sit back and collect their full payment, often at a higher interest rate.” This argument won favor with Washington, and now the President is doing the following: Read more
Banking Department Takes Action Against Mortgage Modification Companies
Companies ordered to stop unlicensed activity in Pennsylvania
HARRISBURG, Pa., April 22 /PRNewswire-USNewswire/ — The Department of Banking recently ordered four out-of-state mortgage modification companies to stop engaging in unlicensed activity in Pennsylvania.
The department issued cease and desist orders against Consumer Loan Modification of Arizona and U.S. Settlement Services of Florida on April 10 and Federal Loan Modification Law Center LLC of California on April 14. All three companies advertise on their Web sites to refinance mortgage loans in Pennsylvania when they are not licensed to do so. The companies must comply with the orders or file appeals by the end of April. Read more
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
Modifying loans may not stem foreclosures: Boston Fed
NEW YORK (Reuters) – Unemployment is a bigger reason for missed mortgage payments than high interest rates, according to a study from the Boston Federal Reserve that raises questions about President Barack Obama’s plan to stem foreclosures by modifying loans.
Borrowers are more likely to default on their payments because they have lost their jobs or because the price of their homes has plummeted than because of tough terms on their mortgages, the study found.
Loan modifications are not necessarily a better deal for investors either, wrote Boston Fed economists Christopher Read more
JPMorgan Uses Unique Strategy To Reach Troubled Borrowers
JPMorgan Chase & Co. (JPM), trying to show its gentle side to troubled homeowners, is offering them rare face-to-face counseling from trained advisors in 24 “homeownership” centers around the country.
The initiative is partly to counter the allegation that lenders give short shrift to such borrowers. At a recent congressional hearing, banks were criticized for funneling struggling homeowners to call centers, where service was poor and waits were long.
JPMorgan also hopes the strategy will help get around one of the biggest obstacles to loan modifications: distressed borrowers’ reluctance to contact their lender in the first place.
“It’s a visible and understandable sign to consumers that we want to talk to you about your mortgage if you are struggling,” Thomas Kelly, a JPMorgan spokesman, said.
JPMorgan is alone among major mortgage servicers to open such walk-in centers, though many have boosted staff to assist borrowers over the phone. Its 24 centers have been opened in areas hard-hit by the housing bust, including nine in California and five in Florida. Others are in the New York City area as well as Phoenix, Denver, Atlanta, Chicago, Detroit Las Vegas, Philadelphia and Washington, D.C.
