Sunday, November 29, 2009

Bad bank!

Well, it looks like the government is rolling out ANOTHER plan to save troubled home owners. It's all to evident at this point that the mortgage modification plan (HAMP) isn't working all that well. Out of 500,000 trial modifications less than 2000 were made permanent.

What's the newest plan you ask? They are going to try and shame the banks into making more modifications permanent. Yup, they are gonna start calling the banks names! I can see it now as Obama says "Bank of America, you just suck. You only modified 500 loans".

I wonder how long this will back up the mythical Tsunami and what will they come up with next. This one is so lame it's almost an admission that they are out of ideas.


FairEconomist said...

Actually there was a honker of a design flaw in the original HAMP. Servicers got paid for starting mods - but not for completing them! Lo and behold, what happens?

The change is supposedly to fix that goof.

Empire Realty said...

I have seen one decent mod since this mess started, a reduction of $76k in loan balance and decent terms putting the amount owed within 10% of present value.

I see a bigger problem coming, there is a huge log jam in sales. I did some analysis on my favorite investing zip code 92335, yea I am a slum lord, found some interesting short sale facts.

In the last year there were 1,049 short sales listed with 99 ending in a closed sale, very bad! Presently there are 306 pending sales of all types even though in last six weeks only 19 sales closed.

Even though every home is selling in a day with 20 offers on each home only a very small fraction of them are actually closing.

I have no faith in the govt to do anything meaningfull and I see the sales and foreclosure systems locked up. When all this breaks loose we will see something interesting.

Take care!

golfer_X said...

I see part of the "new" plan is to make short sales more appetizing for the lenders. The gov is going to offer cash incentives for short sales similar to what they are offering for loan mods. Hopefully this will speed up the short sale process.

Borrowers/owners will get a $1500 check to help with moving expenses.

The lenders will get $1000

But best of all, second lien holders will get $3000 for releasing thier liens. This more than anything should help since these are the guys that usually "F" up the short sale.

Borrowers must be fully released from further liability though. The lenders might not like this bit!

We will have to wait and see if this helps. It does offer all parties some incentive to make a short sale happen and that could make a difference. If this plan works it may turn that dreaded Tsunami into a ripple. But regardless of whether the homes list as short sales or REO's the pressure on prices should be the same....That pressure should continue to push them down.