2nd Loan Mod rumors have been around for some time. Who knew? My colleague has handled a few in the course of modifying combined loans. With different lenders it's not exactly a picinic. Officially, this Directive to modify 2nd Liens was issued in August 2009, but not adopted by any banks until January 2010. Now Bank of America, Wells Fargo, Chase (others mooted) are participating: Of course, Banks interpret these guidelines liberally as do the investors.
According to a local Bankruptcy Attorney "This is good news for some of my clients. In some Chapter 13 cases we are able to void the second mortgage if there is no equity in the home above the amount owed on the first. "
The 2MP Directive reads: "Under 2MP, when a borrower's first lien is modified under HAMP and the servicer of the second lien is a 2MP participant, that servicer must offer either to modify the borrower's second lien according to a defined protocol or to accept a lump sum payment from Treasury in exchange for full extinguishment of the second lien. The 2MP offer will be made in reliance on the financial information provided by the borrower in conjunction with the HAMP modification and without additional evaluation by the second lien servicer."
For the full document: https://www.hmpadmin.com/portal/docs/second_lien/sd0905.pdf
Enter Principle Reductions, Stage Right: Real or Just PR?
This program will land June 2010 with Bank of America loans that are more than 120% under water and over 60 days delinquent. We could get down to serious business saving homes. According to the news blurbs less than 2% of modified loans have involved principal reductions to date. This could change!
The US Treasury Department Administers HAMP. No watchdogs. No visible means of support.
Now, concerns that "silent" second liens pose extra risk to first lien bond holders in residential mortgage-backed securities (RMBS) has raised issues whether there will be even less investment in US Bonds or Securities by foreign investors. (Transate: any investor). House Financial Services Committee chairman Barney Frank (D-Mass.) is urging the big box lenders to pursue "write down second mortgages." The very same House Committee that handed out our dollars to these very lenders to stay afloat.
As my pals Frank and Brian at Think Big Work Small suggest: as the Feds pull out of the RMBS market we have just a couple of days before RATES, FHA fees and all things mortgage are going up. Just in time for Spring! http://www.thinkbigworksmall.com/mypage/archive/1/50105
Are you speaking up yet? www.congress.org