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Posts Tagged ‘mortgage cram-downs’

The Real Issues Behind the Foreclosure Crisis

Posted by Larry Doyle on October 13th, 2010 12:32 PM |

What is really going on in regard to the moratorium on mortgage foreclosures? A lot. Not all of it would qualify as the best of “sense on cents.” My thoughts include the following:

1. Can we now declare the HAMP (Making Home Affordable) program to be totally futile? How is it that everybody on Wall Street and in Washington is now promoting that the economy will be harmed if we forestall the mortgage foreclosure process? What the hell have the wizards in Washington been doing via HAMP and through Freddie and Fannie for the last 18 months? The simple fact is our policy makers have done everything in their power to inhibit the markets from working. Now, all of a sudden, they become proponents of free market principles? Were we born yesterday? Not here at Sense on Cents.

I have continually harangued our Washington politicos for not allowing the housing market to clear, and highlighted how forestalling that process would only prolong our economic pain. We’re feeling that pain now and will be for the foreseeable future.

2. Where are we going with this moratorium? (more…)

Mortgage Modification Applications Decline in November

Posted by Larry Doyle on December 14th, 2009 4:01 PM |

If you don’t buy a ticket, you can’t get into the game.

The Obama administration’s attempt to stabilize the housing market has been an abysmal failure.  That fact has been widely broadcast here at Sense on Cents and increasingly at other outlets. While the administration is now attempting to revive this initiative, the fact is the trend in this program is declining. What trend? How is that defined?

Just as a student won’t gain admission to a school without having applied, similarly homeowners will not gain the benefits of a mortgage modification without processing an application. Thank you to our friends at 12th Street Capital for sharing a recent report produced by Bank of America highlighting a number of trends in mortgage modifications, including applications. Let’s navigate. Bank of America reports:

Last month we said that we expected the focus of the HAMP program to shift from outreach and initiation of new trial modifications to completion of modifications and much of this has been confirmed now. The number of trial modifications started over the last month was the lowest yet at about 77k. This represents more than a 50% drop from the prior month. Also, the number of offers given over the last month was at all time lows dropping 30% from the previous month. This month’s report also disclosed permanent modifications for the first time. So far, 31k trial modifications have been successfully converted to permanent modifications. This represents only 4% of started trial modifications. Furthermore, an equal number have failed and are no longer active.

What are the actual figures for mortgage modification applications since this program was launched last spring? BofA reports:

May: 50,130
June: 93,146
July: 110,397
Aug: 133,192
Sept: 100,216
Oct: 163,913
Nov: 77,414,

While Uncle Sam will try to make a go of saving this program, the fact is it’s a pea shooter in the midst of a sandstorm. What would be the heavy artillery? Principal reduction via mortgage cram-downs.

Although Congress has shot down that plan twice, look for a return engagement in 2010.

For those interested in reviewing the Bank of America Mortgage Modification Monitor, click on the image below to access the entire pdf document:


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