Loan Mods not working with largest banks
http://www.bloomberg.com/apps/news?pid=20601103&sid=a7kYntqozaKo
“Bank of America Corp. and Wells Fargo & Co. were the worst performers among the biggest U.S. banks in modifying loans for struggling homeowners, according to a Treasury Department report.”
It appears the large banks aren’t prepared to handle all of these loan modification requests, so many aren’t getting done.
“Many banks don’t yet have the capacity to process the volume of loan modifications being demanded, said David Sisko, the head of default management services for Deloitte & Touche LLP. He said modification specialists have gone from processing an average of 50 to 100 loans a month to 200 to 300.”
It appears that these banks can’t handle all of the loan modification requests that may explain why so many loan modifications aren’t getting done. We have another blog post on the stats and risks of loan modifications, and well as altering timelines now being released on the foreclosure process with loan mods.
“Unless key challenges are addressed, this program will never get to full scale,” said Brenda Muniz, the legislative director for the Association of Community Organizations for Reform Now, or ACORN. “Servicers remain woefully understaffed, they are overwhelmed by the large volume of borrowers seeking loan mods and they are violating” program terms, she said.”
It seems it’s just a matter of them being overwhelmed and understaffed, if you attempt that one time to do a loan modification and it drags out, than you may lose your change to do anything else if you run out of time.
“Some banks are requiring borrowers to make up-front payments to receive modifications and foreclosing on loans without reviewing their eligibility for modification, she said.”
There has been talk of a lot of applicants for loan modifications needing to pay a lot of money upfront, and that’s the opposite of short sales where the seller’s don’t pay anything up front.
“Eligible loans under HAMP are those that are at least 60 days past due, in foreclosure or bankruptcy, and originated prior to 2009. The underlying property must be owner occupied and conform to Fannie Mae and Freddie Mac loan limits, which can be as high as $729,750 in some areas. The data excludes Federal Housing Administration and Veterans Affairs loans.”
that’s a lot of rules and ineligible loans. We are seeing short sales getting done even if you are zero payments behind currently, this is beginning to be an increasing trend with the new ARMS coming due.
“A lot of these modifications are very hard to do, it takes time and you can’t rush it,” said Paul Miller, a bank analyst for FBR Capital Markets in Arlington, Virginia.”
It appears people believe these loan modifications are very hard to do, banks maybe just don’t have a plan for how to get them done in a timely matter, if at all.
“The government is under a lot of pressure to react and they announce these programs where the infrastructure is not in place to service the program,” Miller said.”
“More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June, Irvine, California-basedRealtyTrac Inc. said July 16 in a statement. That’s a 15 percent increase from a year earlier.”
With the growing number of foreclosures, I think we will continue to see an increase in the popularity of short sales, as more foreclosures become available, it will continue to lower comp prices in all neighborhoods, causing the effect of even those with no financial problems to do short sales.
If you are interested in doing a short sale, please fill out your info at www.wecallyourbank.com
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