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.