Comments on: Loan-modification failure of the day http://blogs.reuters.com/felix-salmon/2010/07/21/loan-modification-failure-of-the-day/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: lambertstrether http://blogs.reuters.com/felix-salmon/2010/07/21/loan-modification-failure-of-the-day/comment-page-1/#comment-16963 Thu, 22 Jul 2010 13:38:06 +0000 http://blogs.reuters.com/felix-salmon/?p=4799#comment-16963 Grok it? They like it. Aristotle: You are what you repeatedly do. So with policy.

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By: nbywardslog http://blogs.reuters.com/felix-salmon/2010/07/21/loan-modification-failure-of-the-day/comment-page-1/#comment-16958 Thu, 22 Jul 2010 05:53:57 +0000 http://blogs.reuters.com/felix-salmon/?p=4799#comment-16958 Oh I’m sure Treasury copies that, Houston. Quite a few ruffled feathers by the look of the thread.

The old adage about statistics was always wrong: there are lies, damned lies, and syntax.

http://nbyslog.blogspot.com/2010/07/opin ion-moral-hazards-for-unethical.html

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By: DaDaDan http://blogs.reuters.com/felix-salmon/2010/07/21/loan-modification-failure-of-the-day/comment-page-1/#comment-16953 Thu, 22 Jul 2010 03:10:42 +0000 http://blogs.reuters.com/felix-salmon/?p=4799#comment-16953 @JimFickett – I just posted a comment over at Alphaville that I’m pretty sure BarCap is wrong. They claim that Treasury is removing defaults from the delinquency stats, but that assumption makes no sense as it would render the meaning of the “90+ delinquent” column meaningless. Additionally, the introduction to the report on page 1 seems to refer to these loans as defaults.

And, in general, if people have questions about the numbers in the report, I would suggest calling the Treasury Department and asking before publicly calling them liars.

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By: DaDaDan http://blogs.reuters.com/felix-salmon/2010/07/21/loan-modification-failure-of-the-day/comment-page-1/#comment-16951 Thu, 22 Jul 2010 02:51:00 +0000 http://blogs.reuters.com/felix-salmon/?p=4799#comment-16951 I wouldn’t necessarily interpret these as people voluntarily turning down HAMP and opting for an alternate modification. Prior to the requirement to verify income upfront, many trials were started on stated income. Many of those trials were then cancelled due to borrowers not submitting their documentation. So, this table shows the current status of all people whose trials have been cancelled, not necessarily at their request.

Additionally, you suggest that borrowers are gravitating to alternate mods because HAMP mods don’t contain any principal forgiveness and thus there is no incentive to stay in. There is no prohibition against principal forgiveness in HAMP. So, if servicers were planning to offer it in an alternate mod, they would almost certainly prefer to do so within a HAMP mod so they could receive incentives.

Ryan Avent’s quote suggests there needs to be a solution to negative equity. Well, Treasury has added a subsidized principal reduction component to HAMP to answer this criticism.

@Mike_Dillon – Servicer incentives are $1000 per permanent modification. Investors receive a cost share payment that is variable, but hard to view it as income as they receive a partial subsidy on the decreased payments they are receiving as a result of the mod. Borrower incentives are $5000 ($1000 per year for 5 years).

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By: JimFickett http://blogs.reuters.com/felix-salmon/2010/07/21/loan-modification-failure-of-the-day/comment-page-1/#comment-16947 Wed, 21 Jul 2010 22:01:00 +0000 http://blogs.reuters.com/felix-salmon/?p=4799#comment-16947 The link above is to an older report. The latest report, with June data, is http://financialstability.gov/docs/June% 20MHA%20Public%20FINAL%20072010.pdf.

BarCap disses some of the misleading info in this report at http://ftalphaville.ft.com/blog/2010/07/ 21/293876/barcap-vs-hud-on-hamp/.

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By: CDNrebel http://blogs.reuters.com/felix-salmon/2010/07/21/loan-modification-failure-of-the-day/comment-page-1/#comment-16939 Wed, 21 Jul 2010 18:21:29 +0000 http://blogs.reuters.com/felix-salmon/?p=4799#comment-16939 Maybe this is a dumb idea, I dunno, but couldn’t the banks put mortgages ‘on hold’, whereby they would take possession of a home but rent it out really cheap (ie, enough to cover their expenses + a little for their trouble) to the owners until either: a) the market improves enough to make these mortgages NOT so underwater; b) a suitable short sale buyer is found; c) the owner is able to comfortably make payemtns again. There could be a time limit depending on the amount of equity in the home – eg more equity, more time – capped at five years? And mortgages that are/were deemed predatory will be traced to their orignators, and THEY will be made liable to security holders and banks alike. Maybe the last bit goes too far (or perhaps some other measure can be taken against them) but I think that the orignators have gotten a free pass here when they are as much to blame as anyone. Thoughts?

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By: TimmyGeithner http://blogs.reuters.com/felix-salmon/2010/07/21/loan-modification-failure-of-the-day/comment-page-1/#comment-16938 Wed, 21 Jul 2010 18:15:33 +0000 http://blogs.reuters.com/felix-salmon/?p=4799#comment-16938 HAMP is a huge flop and waste of taxpayer money. It’s astounding the Michael Barr, who has been instrumental in HAMP, is being considered for being named head of the Consumer FInancial Protection Bureau.

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By: Mike_Dillon http://blogs.reuters.com/felix-salmon/2010/07/21/loan-modification-failure-of-the-day/comment-page-1/#comment-16936 Wed, 21 Jul 2010 16:58:01 +0000 http://blogs.reuters.com/felix-salmon/?p=4799#comment-16936 From everything I’ve been hearing, the incentive to lenders/note holders/servicers far outweighs the incentive to borrowers. I am aware of several individuals who have been in the loan mod “process” with their servicer for upwards of two years now. And more than a few in the process for over a year by way of NACA’s program as well. We’re talking YEARS here. Not months…

A quick stab at a calculator tells me that 299,092 permanent modifications translates into $1,345,914,000.00 in “incentives” have been paid as a result of these permanent mods. Not a bad incentive.

On a separate note, I wish that I had paid more attention to the Cammy Baker loan mod story out of Windham, OH that you covered back in May. If I’m looking at the correct files, the foreclosure never should have been allowed to go forward – never mind force the Bakers into a loan mod.

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