Modifications

Today, more than 11 million homeowners - or more than one in four of those with a mortgage - are under water, owing more than their home is worth. At the end of March, there were some 2.4 million mortgages in foreclosure, and almost 3.5 million more were at least 60 days past due. Modifications of at-risk mortgages continue to gain momentum. About 640,000 permanent modifications were put in place under the Home Affordable Modification Program and other programs in the first four months of this year. That figure is roughly comparable to the number of mortgages that entered foreclosure over the same period.

Goldman Sachs and Modifications

Consider the case of the Baileys. Litton, a subsidiary of Goldman Sachs, services their loan, and Litton’s contract with investors has no clear language banning modifications. In fact, documents show that over 115 other mortgages [1] from the same investment pool have already been modified. representative of investors in the Baileys’ mortgage says only the servicer can decide when to modify loans. While he couldn’t comment on an individual case, Bank of New York Mellon spokesman Kevin Heine says it’s “misinformation” to say that investors make these decisions. nobody knows the exact extent to which servicers are passing blame on to investors. Some housing counselors estimate that 10 percent of the denials they see are attributed to investors; others say they see as many as 40 percent. Either way, tens of thousands of homeowners may be affected, their attempts to modify their mortgage wrongly denied.


The Treasury Department prior refusual to release the exact formula for the NPV model, bringing criticism from homeowner advocates and industry experts.

http://stopforeclosurefraud.com/2010/07/24/mortgage-servicers-playing-the-blame-game/

http://www.law.berkeley.edu/files/bclbe/Subprime_Securitization_Paper_John_Hunt_7.2010.pdf

http://www.propublica.org/article/the-secret-test-that-ensures-lenders-win-on-loan-mods-915

http://www.loansafe.org/when-denying-loan-modifications-mortgage-servicers-often-wrongly-blame-investors

http://www.makinghomeaffordable.gov/borrower-faqs.html

http://online.wsj.com/article/SB10001424052748704421304575383540017919202.html?mod=WSJ_hps_editorsPicks_1

Number of Modifications are misleading

In commentary published Wednesday, analysts at the research firm Barclays Capital took issue with the Treasury’s calculations of redefault rates, primarily because the numbers appear to be cooked to imply greater success since cancelled modifications – both trial and permanent – are not factored into the equation. This same point was brought up by a number of DSNews.com readers who also perused the data with a discerning eye.


“We find that the data as reported in this table are misleading and fail to capture the full magnitude of redefaults from these modifications,” Barclays said.

http://www.dsnews.com/articles/barclays-argues-treasury-report-on-hamp-redefaults-is-misleading-2010-07-21