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Re: Orwell Lives...New Definition for "Homeowner"
What should happen, but won’t.
Gov. needs real and enforced regulation on banks holding nonperforming assets forcing liquidation, cleaning the system. Mark to market pricing selling assets would bring down housing pricing to average annual income affordability. Government backed program intervention has only delayed price decreases and will take years for debts to be paid down. . Government is protecting banks and bond holders guaranteeing mortgage collections using taxpayers funds. Note modifications are only a short term fix. As home pricing devalues home owners will soon find themselves in the same situation before the note modification. Delaying the debt deflation using programs with government backing will only delay affordable pricing and keep homeowners in debt they cannot service. Homes need to be sold for cash or terms on an open market bidding system. Pricing would drop fast allowing existing in debt home owners to walk away from their existing home and repurchase, lowering their debt payments. Thus, lowering debt payments would allow for more savings or spending giving the economy a little breathing room.
Government/Servicers will avoid foreclosure filings and rework debt. Few sales transactions take place as debt is reworked internally by note holders and government. It will take years and market
re-pricing as government inflates creating price stability in nominal terms.
Servicers granted powers by HAMP will be the processor for government regulations.
Home owners that walk away and or not eligible for HAMP processing will be legally prosecuted for debt collections, borrowers with credit worthiness will be lien for debt collection. Others will be sign on for note modifications agreements. Short sales will be granted only if recourse of lien holders can be enforced and debt collected.
Now comes B of A.
http://www.mortgagenewsdaily.com/032...ations_boa.asp
Originally posted by bill
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What should happen, but won’t.
Gov. needs real and enforced regulation on banks holding nonperforming assets forcing liquidation, cleaning the system. Mark to market pricing selling assets would bring down housing pricing to average annual income affordability. Government backed program intervention has only delayed price decreases and will take years for debts to be paid down. . Government is protecting banks and bond holders guaranteeing mortgage collections using taxpayers funds. Note modifications are only a short term fix. As home pricing devalues home owners will soon find themselves in the same situation before the note modification. Delaying the debt deflation using programs with government backing will only delay affordable pricing and keep homeowners in debt they cannot service. Homes need to be sold for cash or terms on an open market bidding system. Pricing would drop fast allowing existing in debt home owners to walk away from their existing home and repurchase, lowering their debt payments. Thus, lowering debt payments would allow for more savings or spending giving the economy a little breathing room.
Government/Servicers will avoid foreclosure filings and rework debt. Few sales transactions take place as debt is reworked internally by note holders and government. It will take years and market
re-pricing as government inflates creating price stability in nominal terms.
Servicers granted powers by HAMP will be the processor for government regulations.
Home owners that walk away and or not eligible for HAMP processing will be legally prosecuted for debt collections, borrowers with credit worthiness will be lien for debt collection. Others will be sign on for note modifications agreements. Short sales will be granted only if recourse of lien holders can be enforced and debt collected.
Now comes B of A.
http://www.mortgagenewsdaily.com/032...ations_boa.asp
3-24-2010
Reuters is reporting that Bank of America will soon begin offering loan modifications based on a reduction of the mortgage principal to some of its borrowers. The plan will be extended to troubled borrowers who are holding mortgages with principal balances of 120 percent or more of the home's market value or who are confronted with endlessly increasing balances on negative amortization loans.
Under the plan BOA will forgive up to 30 percent of the mortgage loan balance in two stages, but with a quid pro quo from the homeowner. The bank will offer an interest-free forbearance of up to 30 percent of the principal balance for five years. If the homeowner stays current on mortgage payments for the period of time, then the amount will be forgiven. On paper, at least, that forgiveness will allow the homeowner to return his loan to an LTV of 100 percent.
Homeowners who have payment option mortgages will also be helped under the new plan. Under option payment mortgages, borrowers can choose to pay less than the interest due in a given month with the unpaid amount added to principal. When the principal has mushroomed to an amount, usually around 110 percent loan to value, the loan converts to fully amortizing payment. This often throws the borrower into almost immediate delinquency. Under the plan Bank of America will cut the principal balance on these loans to as little as 95 percent of the property's current value.
Other proposed changes include possible payment reductions on some prime hybrid adjustable rate mortgages and continuation of the bank's National Homeowner Retention Plan through the end of 2012, an extension of six months.
Bank of America is among the servicers who have been criticized for their performance under the Making Home Affordable Program (HAMP). As of the end of February, the Treasury Department reported that the bank was servicing 1.09 million mortgage loans that were 60+ days delinquent. Of those, 240,550 or about 24 percent had been placed in a trial program and less than 10 percent of those, 20,666 had been converted to permanent modification status. While Bank of America is by far the largest servicer of delinquent mortgages participating in the HAMP program, its achievements rank well below other major participants such as J.P. Morgan/Chase and Citi which had enrolled borrowers at rates of 39 percent and 52 percent respectively. HAMP depends heavily on reducing interest rates to meet program goals. Only 27.8 percent of the modified mortgages have received any reduction of principal.
Reuters said it expected the announcement of Bank of American's new initiative to be released Wednesday. On Tuesday Bank of America was sued in U.S. District Court in the Western District of Washington by two Seattle residents who allege that the Bank has "strung out, delayed, and otherwise hindered the modification processes" because it has a financial incentive to do so.
The plaintiffs in the suit, Kahlo v. Bank of America, are seeking class-action status for their suit. They maintain that the bank's participation in HAMP was mandated by the Treasury Department because the bank had accepted funds from the Troubled Asset Relief Program. However, the suit alleges that the bank is not modifying loans because to do so would require it to repurchase more loans and it would make less money from late charges and servicing fees if it had fewer delinquent loans. The bank's activity, according to the plaintiffs, had left thousands of borrowers worse off than before they began the modification program.
Reuters is reporting that Bank of America will soon begin offering loan modifications based on a reduction of the mortgage principal to some of its borrowers. The plan will be extended to troubled borrowers who are holding mortgages with principal balances of 120 percent or more of the home's market value or who are confronted with endlessly increasing balances on negative amortization loans.
Under the plan BOA will forgive up to 30 percent of the mortgage loan balance in two stages, but with a quid pro quo from the homeowner. The bank will offer an interest-free forbearance of up to 30 percent of the principal balance for five years. If the homeowner stays current on mortgage payments for the period of time, then the amount will be forgiven. On paper, at least, that forgiveness will allow the homeowner to return his loan to an LTV of 100 percent.
Homeowners who have payment option mortgages will also be helped under the new plan. Under option payment mortgages, borrowers can choose to pay less than the interest due in a given month with the unpaid amount added to principal. When the principal has mushroomed to an amount, usually around 110 percent loan to value, the loan converts to fully amortizing payment. This often throws the borrower into almost immediate delinquency. Under the plan Bank of America will cut the principal balance on these loans to as little as 95 percent of the property's current value.
Other proposed changes include possible payment reductions on some prime hybrid adjustable rate mortgages and continuation of the bank's National Homeowner Retention Plan through the end of 2012, an extension of six months.
Bank of America is among the servicers who have been criticized for their performance under the Making Home Affordable Program (HAMP). As of the end of February, the Treasury Department reported that the bank was servicing 1.09 million mortgage loans that were 60+ days delinquent. Of those, 240,550 or about 24 percent had been placed in a trial program and less than 10 percent of those, 20,666 had been converted to permanent modification status. While Bank of America is by far the largest servicer of delinquent mortgages participating in the HAMP program, its achievements rank well below other major participants such as J.P. Morgan/Chase and Citi which had enrolled borrowers at rates of 39 percent and 52 percent respectively. HAMP depends heavily on reducing interest rates to meet program goals. Only 27.8 percent of the modified mortgages have received any reduction of principal.
Reuters said it expected the announcement of Bank of American's new initiative to be released Wednesday. On Tuesday Bank of America was sued in U.S. District Court in the Western District of Washington by two Seattle residents who allege that the Bank has "strung out, delayed, and otherwise hindered the modification processes" because it has a financial incentive to do so.
The plaintiffs in the suit, Kahlo v. Bank of America, are seeking class-action status for their suit. They maintain that the bank's participation in HAMP was mandated by the Treasury Department because the bank had accepted funds from the Troubled Asset Relief Program. However, the suit alleges that the bank is not modifying loans because to do so would require it to repurchase more loans and it would make less money from late charges and servicing fees if it had fewer delinquent loans. The bank's activity, according to the plaintiffs, had left thousands of borrowers worse off than before they began the modification program.
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