From Housingwire.com: “The Making Home Affordable Modification Program (HAMP) adds another layer of uncertainty for private label securitization investors, making it more difficult to predict cash flows, according to a report by analysts at Amherst Securities Group, who added they expect relatively few HAMP workouts to be successful.
Additionally, it’s taking longer for bad mortgages to move from last payment to liquidation, and the pace varies by servicer: “The trial modification period essentially holds the loan in a suspended state for 90 days, making it difficult to assess what is happening with modifications,” the report said …
While HAMP workouts are keeping the pools of real estate owned (REO) property relatively small, Amherst predicts a low percentage of eventual success of HAMP modifications is inevitable.”
Calculated Risk had some notes on the same article:
The trial period has been extended for an additional 60 days – so make it suspended animation for 150 days! See One Company Responsible For Nearly Half Of All Permanent Mortgage Modifications
Treasury and COP note that many of those temporary modifications may be in process of getting paperwork
submitted in order for them to achieve permanent status. Treasury granted a two-month extension — on
top of the three-month trial — for borrowers and servicers to get their documentation ready.
Much depends on the success of HAMP. If many of these modifications don’t become permanent there will be another flood of foreclosures on the market. BofA has already promised a “spike” in foreclosure at the end of this year, see: Delayed Foreclosures Stalk Market
We are going to see a spike from now to the end of the year in foreclosures as we take people out of the
running” for a loan modification or other alternatives, says a Bank of America Corp. spokeswoman.
Here’s my take:
I work with people who are trying to get loan modifications. I see the results that many people get when they do their own modifications.
I have seen a homeowner 3 months behind on their payments, work with the bank for more then 6 months, only to have the bank tell them if they bring in all of the back payments they will lower the mortgage payment $200 bucks for a year. Then it goes back to their normal payment.
I’ve also seen people come in who worked with the bank to get a loan modification only to see their new payment higher then before! How does that help anybody?
I think the issue is that homeowners, trying to do their own modification, don’t push the bank hard enough to get a payment that will substantially save them money. By all means, homeowners can do their own modifications. But unless they know what results they COULD get, they won’t know if they are being screwed over or not.
If you would like to see what a real loan modification looks like, please give me a call. (480) 389-5199 In about an hour, we can run through your situation and see an idea of what we could expect from completing a modification. Sometimes a modification isn’t the right choice. We can help you lay out all of your options. Don’t wait until it’s too late. (480) 389-5199
Keller Williams Arizona Realty