Loan Modification Quiz Question 1

Q. A borrower has a debt-to-income ratio (DTI) of 80% and a current housing ratio of 60% (ratio of housing payment to income). If the borrower is eligible for a Chapter 7 bankruptcy, would filing the Chapter 7 help in getting a modification? A. If you had been tried this before the 2008 crisis, your answer would have been unquestionably …

A Guide to Foreclosure Fix Failures

Last week, ProPublica reported that it had finally obtained government audit reports of just one of the nation’s five largest loan servicers–GMAC–and that those documents had revealed significant flaws and lapses in the alleged governmental efforts to alleviate the national foreclosure crisis. Now, the site is following up that information with a comprehensive guide to the government programs intended (or …

Industry Insiders Speak Out About Mortgage Modifications

Yesterday, Yves at Naked Capitalism shared this revealing clip from The Dylan Ratigan Show in which a former employee at Litton and and a former consultant to Fannie Mae share their perceptions of the modification “efforts” to date.  Unsurprisingly, the former mortgage servicer indicates that many borrowers who should have been eligible for modifications were denied simply because it was more …

The Big Banksters and the Reign of Error

O. Max Gardner III March 11, 2011 Shelby NC I don’t particularly like Whoppers or Big Macs but the current mortgage crisis reminds me of the old Wendy’s TV commercial called “Where’s the Beef?”  I think of this commercial because I have wondered for years and years when America will finally lay the blame for the current and on-going financial …

Pro Publica Looks Beyond Claims of Modification Success

In Loan Modification Program Left Homeowners’ Fate in Hands of Dysfunctional Industry, Pro Publica looks at the realities surrounding the governmental effort to reduce foreclosures by encouraging loan modifications, and points out one obvious but often ignored flaw in the plan:  current programs leave both decision-making and execution in the hands of the very people who broke the system in the …

Servicer-Created Defaults

Naked Capitalism presents a clear and concise overview of how mortgage servicers and their bogus fees drive homeowners into default and foreclosure in How Servicer Junk Fees Push Borrowers into Foreclosure. Yves Smith explains why servicer abuse problems don’t get the same level of attention as less-sympathetic defenses based on missing paper and bad transfers: This problem is very much underdiagnosed …

Bankruptcy Court More Effective Than Loan Modification Efforts

From Start Fresh Today. Homeowners are finding that obtaining a loan modification even with an attorney’s assistance is costly, lengthy and only 50% successful. Filing for bankruptcy has become a viable option for consumers earning an income but facing foreclosure. Helping a client file for Chapter 13 bankruptcy and putting together a plan allowing the homeowner to catch up on …

21% HAMP First Year Redefault Rate

From Professor Adam Levitin on Credit Slips. The Congressional Oversight Panel has a new HAMP report out. Like all COP reports, it’s long and chock full o’ analysis. There’s an executive summary up front, but some of the most important points are only in the report proper (especially pp. 100-111). I think there are three big things to take away …

Oversight Panel Slams Loan Modification Program, but Highlights an Opportunity

Via ProPublica, Dec. 14, 2010 by Karen Weise A government watchdog panel issued a report today sharply rebuking the government’s loan modification program and saying it represents “a failure to make a dent in the foreclosure crisis.” The panel has been flagging shortcomings on the program for over a year: that the program has lax enforcement, unclear goals, is riddled …