Encinitas Local Realtor » Loan Modifications

How Effective is the Administration’s Loan Modification Program?

marilyn — Thu, 18 Feb 2010 23:52:58 +0000

Banks participating in the Home Affordable Mortgage Program (HAMP), announced a year ago this week by President Obama, have been slow to turn temporary loan modifications into permanent ones.

“The overaraching sense is that the loan modification process has not worked that well,” said Bert Ely, an independent banking consultant.

Still, the program is expected to show better progress when data from January is released after a strong push by Treasury Department officials to get banks to make more of the modifications permanent. For example, Bank of America, said recently it had increased the number of permanent loan modifications to 12,700 in January from 3,200 in December, 2009. B of A also said that an additional 13,700 permanent modifications were in their final stage. But that’s a drop in the bucket considering B of A holds about 1 million loans that are at least 60 days delinquent.

Trial loan modifications have kept many of these loans outof foreclosure, but by the end of this year, 2.4 million borrowers are expected to lose their homes. That would be up from 2.1 million foreclosures and short sales last year.

A report last week by Moody’s Investor Services called the Abama administration loan modification program’s impact “underwhelming.” Officials noted that not all homeowners are eligible; the program is only for owner-occupied homes and excludes a variety of loans, including jumbo loans. And the administration continues to make changes, including a requirement added last month requuiring homeowners to document their income before a trial modification is granted.

The program continues to draw criticism. Banks have complained they’ve had trouble getting homeowners to provide the necessary documents. Frustrated homeowners have complained of bureaucratic runarounds from their lenders. And Federal watchdog agencies have criticized the program. The final verdict is out.

Report on U. S. Foreclosure Activity in January, 2010

marilyn — Fri, 12 Feb 2010 05:27:41 +0000

Realty Trac, one of the leading online marketplaces for foreclosure properties, released its January, 2010 U.S. Foreclosure Market Report, which shows foreclosure filings — notices of default, scheduled auctions, and bank repossessions — were reported on 315,716 U.S. properties during the month, a decrease of nearly 10% from the previous month but still 15% above the level reported in January, 2009. The report also shows that one in every 409 U.S. housing units received a foreclosure filing in January.

“January foreclosure numbers are exhibiting a pattern very similar to a year ago: a double-digit percentage jump in December foreclosure activity followed by a 10% drop in January,” said James J. Saccacio, CEO of Realty Trac. “If history repeats itself, we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the loan modification program or the short sale alternatives work.”

Foreclosure activity decreased by double-digit percentages from the previous month in both California and Florida, and the two states registered nearly identical foreclosure rates — one in every 187 housing units receiving a foreclosure filing.

Other states with foreclosure rates among the nation’s highest were Idaho, Michigan, Illinois, Oregon, and Georgia.

Federal Refinancing Plan Reaching Few Homeowners

marilyn — Fri, 30 Oct 2009 05:10:53 +0000

A program designed to assist homeowners who are “underwater” (that is, whose home debt is greater than the market value of the home) by allowing them to refinance at current low rates despite having little or no equity in the home has reached fewer than 3% of targeted homeowners so far.

As reported in today’s Washington Post, this program, for eligible people whose loans are held by Fannie Mae or Freddie Mac, has only reached 130,000 out of the potential 5,000,000 borrowers. This initiative is separate from the loan modification program. A government spokesperson says they hope the program will begin to move faster in the future.

Non-profit Organization Targets Loan-Modification Scams

marilyn — Fri, 30 Oct 2009 05:09:37 +0000

The L.A. Times reports on October 27th that a national housing nonprofit organization is launching an educational campaign to combat loan modification scams. The nonprofit, NeighborWorks, is starting the campaign in Southern California which has been hit hard by the foreclosure crisis.

So-called loan modification consultants — often attorneys, mortgage bankers, or real estate agents — often ask for up-front fees ranging from $1500 to $3000 from troubled homeowners to help them reduce their mortgage payments. These consultants promise to negotiate with the lenders to work towards a loan modification. Meanwhile, these services are provided to free for federally approved nonprofits, such as NeighborWorks.

Besides paying up-front money, troubled homeowners also lose valuable time which could be better spent with free nonprofit agencies.

“California Atty. Genl. Jerry Brown’s office has reported receiving more than 2,500 complaints against loan modification consultants and businesses through Oct. 14th of this year, up from 163 in all of 2008,” the newspaper reports.

Eileen Fitzgerald, from NeighborWorks, says that these frauds often target Seniors, Latinos, African Americans, and Asian Americans.

For the first three weeks of November, community organizers and volunteers with NeighborWorks and its local affiliate, Los Angeles Neighborhood Housing Services, will be distributing marketing materials to warn people about loan modification fraud.