Piggington has featured our friends at Effective Demand, and their recent post about loan mods:
http://effectivedemand.blogspot.com/2009/06/california-loan-modifications-update.html
It’s an update from the California DofC about who’s getting what when it comes to modifications, and it’s noted that virtually no one is getting their principal reduced.
I want a loan modification too.How do I get one.Do I have to stop paying before anyone will talk to me?
I’d sure like the government to subsidize my rent. I’d really appreciate that since I think its too high.
My lender Chase has my primary in house and my HELOC was sold to ING but Chase is still servicing the HELOC. My mod package is sitting on my desk and I have yet to send it in. I do not believe I can justify ‘hardship’ because I am a responsible person, live within my means, have money saved in the bank and have very low expenses and no debt other debt (except on car with a measly $330/mo payment). Chase is following the making homes affordable program which seems to help those unlike me. Gotta love it. I’m pretty much fed up with this animal farm, I’m going to send the package in today and see what they say. I have not stopped paying my mortgage.
I’m amazed that the chart indicates “deeds in lieu of foreclosure” as flatlined. Lenders resistance to this remedy for a hopelessly delinquent borrower is a costly, ignorant mistake. There are plenty borrowers who want to walk away and are willing NOT to trash the house. Lenders are their own worst enemies.
I can understand why a lender would not be looking at the deed in lieu option. First, it is very impractical where there are junior liens. A lender would have to jump through title insurance hoops and expense to make sure they are not getting stuck in a deed in lieu situation, even if the borrower is willing to cooperate. It is probably more expedient to just foreclose and pay cash for keys or allow a short sale to take place.
I don’t think the banks want any more foreclosures. If they foreclose on all the people who are actually unable to pay and reduce the loan balance or terms for all the others who simply want a reduction, their balance sheets will be decimated.
Is this all the proverbial other shoe to drop?
Interesting article…
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062303500.html
“I have even begged them for a foreclosure,” delinquent mortgage-holder Charlotte Jensen said. When she realized she couldn’t save her Glen Allen home last year, she filed for bankruptcy, packed up her family and moved out. Nearly a year later, Bank of America has yet to take back the home.
…
Some of the backlog reflects the inability of lenders to keep up with the swelling rolls of delinquent properties.
… some of the backlog also reflects an intentional slowdown in the pace of foreclosures as government and industry step up efforts to help borrowers who want to save their homes. Fannie Mae and Freddie Mac, the government-run mortgage financing companies, put a temporary moratorium on foreclosures late last year and many of the country’s largest lenders followed suit.
…
“What we’re seeing more and more right now are cases of a lender threatening foreclosure and the foreclosure sale is canceled at the last minute,” said Jeanne Hovenden, a Richmond bankruptcy attorney, who handled Jensen’s case. “It’s more like the lenders don’t want to own any more real estate and are using foreclosures as a pressure tactic.”
Of course, I don’t know any of the indivdual stories, but I am constantly surprised at how many foreclosure homes I track with their sales cancelled or postponed again and again and again.
I’m not sure how anyone can think we’re close to a bottom on housing.
More excerpts from the WaPo article…
During the first quarter of this year, the share of all homeowners seriously delinquent on their mortgage but not yet facing foreclosure more than doubled to 3.04 percent, or about $227 billion in loans. There was a total of $97 billion in such loans during the same period in 2008, according to Inside Mortgage Finance.
***
The overhang of homes in limbo means that foreclosure rates are likely to increase dramatically during the second half of this year and into 2010 as lenders work through the backlog, said Bob Bellack, chairman of Zetabid, which auctions foreclosed properties.
“Prices will fall to the point where you have equilibrium, and it won’t reach that until there is no longer this foreclosure overhang,” Bellack said.
***
“No one is in a rush, lender-wise, to deal with the property,” he said. “If you have to sell at a loss, why rush?”
Lenders traditionally write down the value of the home six months after an owner stops making payments, but the total loss is not recorded until the property is sold in foreclosure, said Mark Zandi, chief economist of Moody’s Economy.com.
“Some may feel that the property is worth more than the market can bear at this time, and they are willing to wait until” the market improves, he said. “They don’t want to sell it into a completely depressed market.”
***
“It used to be that they wanted to foreclose as quickly as possible. . . . [Now] it’s like this hot potato that nobody wants.”
Thanks for the link Jim, I was wondering what happened. My page view stats skyrocketed. I got linked to by you, piggington forum and the Big Picture all on the same day. I guess this is my 15 milliseconds of fame. 😉