Two more obstacles for the housing market
Posted on September 29, 2009 at 8:25 amThe folks at HousingWire check in with one study taking a closer look at how loan modifications aren’t working and another that suggest an extension of the new homebuyer tax credit won’t stimulate demand anywhere near as much as its backers would want it to.
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Sitel gets into the loan mod business
Posted on August 25, 2009 at 9:43 amCall center operator Sitel says it has signed a contract with a loan servicing company to handle up to 450,000 phone calls a month from borrowers looking to refinance or modify their mortgages. The deal means Nashville-based Sitel will hire several hundred people.
“Sitel has a deep and rich history in the credit services market, particularly when it comes to the minutia of lender-borrower relationships,” said Don Berryman, global chief sales & marketing officer, Sitel. “One of the primary challenges facing lenders is that modifications will not work for every type of borrower, and they face a significant uphill battle when it comes to sifting through these customers. Sitel’s certified agents can quickly isolate the key information required to determine a borrower’s loan modification options, and can effectively expedite the process.”
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One in five Tennessee homes upside down
Posted on August 5, 2009 at 1:04 pm
Moody’s Economy.com delivers an update on homeowners whose properties are worth less than their mortgages and it ain’t pretty. Nationally, one in four homes are now ‘underwater,’ an increase from 16 percent a year ago. Tennessee is in the bottom third of states, but still has 20 percent of its homeowners in negative equity.
With numbers that high, loan-modification plans don’t have much of an effect, says Economy.com’s Mark Zandi.
To date, most foreclosure-rescue efforts have focused on lowering monthly payments by reducing interest rates, in part because the housing crisis began with mortgages that were resetting to higher payments. But the looming negative-equity problem could put more pressure on policymakers to come up with a modification plan that includes reducing loan balances, and not just lowering interest rates.
SEE ALSO: Underwater numbers going back a few years and some info on which banks are actively modifying mortgages these days.
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Newsflash: Loan mods stink
Posted on June 30, 2009 at 9:19 pm
More sobering news from the mortgage front: The OCC and OTS have released a report that chronicles the explosion in loan modifications early this year – up 55 percent from late 2008 – and gives us more evidence that those mods just don’t work well.
SEE ALSO: Our print edition cover story this week on foreclosures.
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Another loan mod push
Posted on April 21, 2009 at 11:32 pmReuters has the story on the Treasury’s unfolding plans to provide relief to holders of second liens. If it gets anywhere, the new proposals won’t go down well in some parts.
“Second-lien holders should get zero,” said Bill Frey, president of Greenwich Financial Services in Greenwich, Connecticut. “Why should a second lien holder get anything if the first lien holder takes a loss? That’s not the way the contracts work, that’s not the way privatization works, that’s not the way America works.”
Making the loan mod case
Posted on February 3, 2009 at 2:31 pmFrom remarks delivered today to the House Committee on Financial Services by senior FDIC official John Bovenzi:
Deteriorating economic conditions will certainly cause redefault rates to increase. It should be noted, however, that even with higher redefault rates, loan modifications still make business sense in many cases. This is because the value preserved through a loan restructuring is generally much greater than the incremental loss from waiting a period of months before the servicer forecloses or otherwise resolves the defaulting mortgage. At IndyMac Federal, the FDIC has used a systematic approach to loan modifications to restructure thousands of unaffordable loans into more sustainable payments. Even assuming a redefault rate of 40 percent, the net present value of loans that we have modified exceeds foreclosure value by an average of $50,000, with aggregate savings of over $400 million. In fact, we believe redefault rates will be much lower, but even at higher rates, systematic loan modifications make good business sense.
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