The Modification Failure

Mortgage and Lending with Christensen Financial Mortgage 385907

Stop and think for a moment;

how many people do you know personally have applied for a mortgage modification? and how many have been successful? if any.

I'm a mortgage lender and I know 1 couple, and they had to make a biiiiig concession.

Here it is;

I was allowed to attend the hearing and the first thing that the negotiator made very clear was

there will be NO balance reduction! NOBODY is reducing balances.

This brings up the biiiiig concession. While the mortgage holder was generous, in my opinion with the rate and payment reduction, the couple was still severely underwater in regards to their equity position, and I mean in excess of 100K. So, the decision had to be made that they really wanted to stay in theri home and that they do not know when they will hit breakeven, never mind achieve a positive equity position.

So, what's the conclusion?

An acceptable modification in many/most cases needs to have and/or consider a balance reduction.


An article today at CNNMoney helps to sum up a laughable position, once again in my humble opinion, by the Treasury in their feeble attempt to prod the big 3; B of A, Chase, and Wells, into doing more in regards to modifications.

They will withhold the incentive payments until they substantially improve their performance in the federal Home Affordable Modification Program.

Here's the banks responses/reactions to a Treasury report dissing their performance to date.


"We realize that continued impovements are needed, but this report does not fairly reflect our leading role in making loan modifications." 


it "respectfully disagrees" with the Treasury's assessment

Bank of America;

We have made great progress in several key performance areas.

To Wells; ya right.   To Chase; of course you do.   To B of A; I'll comment as soon as I stop laughing, bear with me this could take awhile.


" So far, the Administration has paid $1.3 Billion in incentive payments-paid for with funds from the 2008 TARP law-to 84 servicers. It has used about $2 billion of the $46 Billion in TARP funds dedicated to homeowner help.

That's less than 1% over 3 plus years.

please correct me if I'm wrong.

So, funds have been allocated, but in most cases not used. but we have paid out $1.3 Billion in incentives.

I think I'm gonna scream.

I can only reach one conclusion.

The Modification programs are a TOTAL failure.   



Comments (10)

Jack Gillis, M.B.A., J.D., LL.M. Dallas, Texas 214.718.4910
Coldwell Banker Apex, Realtors - Dallas, TX
Locally Known, Globally Connected, COLDWELL BANKER

I occasionally get one approved, but it is a long, long process. Nationally, I think the average is something like 47% approved.

Jun 10, 2011 03:47 AM
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

The modification program is successful in the only possible use. It keeps future renters from retrning to the rental market until they have paid out every possible penny of their resources.  Through a combination of trial modifications and the carrot of false hope, banks manage to extract the last drop of blood from the turnips, while their asset is being safely maintained by unwitting property managers.  Eventually, the bank will decide to take and sell asset and send the penniless renters back to Renterville.  The program is successful.

Jun 10, 2011 03:58 AM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!


that 47% would seem high. i just googled modification success rate and one article stated chase claiming 29% through themselves and other sources. another article stated HAMP was less than 1%. now i didn't do much research here so i'm not saying you're wrong just that that seems a little high to me. 



Jun 10, 2011 04:00 AM
John Mulkey - Waleska, GA
Housing Guru

Jay - I've written about the failures of the modification programs for some time, and the situation only gets worse.  The Administration's original promise to save "millions" of homeowners from foreclosure was nothing more than political rhetoric, and the bankers are "laughing all the way to . . . well, the bank," while they continue to benefit on the backs of taxpayers.

Jun 10, 2011 04:01 AM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!


that's certainly one opinion shared by...well many.

seems like that not only creams the current homeowner, but does nothing at all to help us in the future, but what do i know?



Jun 10, 2011 04:03 AM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!


i'm in southwest florida where we're living it. with all the unused allocated funds why can't we just do a little tweaking and allow some balance reductions?

you're comments, in my opinion are right on.



Jun 10, 2011 04:07 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Less than 20% of those in need were helped by this pile of false hopes !!!!!!

Jun 12, 2011 03:02 PM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!


i believe a lot less. worse than that there are still allocated funds and nothing is being done to utilize them.



Jun 13, 2011 01:01 AM
Stephen Howell
Coldwell Banker Residential Brokerage - Annapolis, MD
Annapolis MD Homes For Sale 443-994-8043

Loan mods ... what loan mods?  If banks can make a decision to pre-approve a borrower in 15 minutes and close a loan in 30 days, then, explain to me why the cannot make loan modification decisions and short sale decisions just as quickly.  It seems to me that banks need to put the loan officers to work and empower them to make short sale pre-approval decisions and then put their underwriters to work finalizing short sale approvals and do it all within 30 days.  That would go along ways to getting everyone moving forward rather than continuing to look back with an eye to blaming others.

Jun 24, 2011 02:56 AM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!


i agree, as i stated i only personally know of 1 mod that was completed.

loan officers and underwriters? you'd think that would be a good idea, well because it is. all the major lenders would have had to do was expand their existing mortgage departments. obviously that didn't happen, and unfortunately i don't think it will, but that sure is a viable solution.



Jun 25, 2011 05:31 AM