More nothing on Housing: Treasury to announce minimal changes to Making Home Affordable program today, Bank of America signs on to second lien HAMP program…
Nothing on housing in SOTU despite the fact that we are about to fall off a cliff and bring the entire economy down in a double dip with collapsing prices (Obama did note the drop in home values but no plan for FAN FRED the biggest hit to taxpayers past, present and future..) Our previous posts on HAMP, FAN FRED, rising defaults and the 2MP Second Lien program here.
Sounds like ‘The Plan’ from the Administration is to waive documentation and force the initial group of trial mods to permanent status. Style over substance, again. How that helps address the imminent walkaways on 4 million more foreclosures no one can say….
The Treasury Department on Thursday plans to unveil changes designed to streamline burdensome paperwork required for its foreclosure relief plan, according to people briefed on the matter.
The tweaks to the problem-plagued program could help more borrowers complete loan modifications. But they are unlikely to placate critics who have been calling for far more dramatic changes.
Lenders will now be required to collect two pay stubs at the start of the process, and borrowers will have to give the Internal Revenue Service permission to provide their most recent tax returns at the same time, according to the people who declined to be identified because the details were not yet final….
OMG!! They are DENSE!! People who haven’t sent in the tax return release form yet likely have lied on their income!!! What are they wasting time on this crxp for when the problem has grown so enormous on shadow inventory and ARMS about to reset just as FED pulls out of QE?!
Here is one good thing, having receipt of HAMP applications ACKNOWLEDGED. Gee what a novel idea? Gawd this entire thing has been an exercise in delaying inventory build and nothing more…
…Participating mortgage companies must acknowledge they received a borrower’s application within 10 days and approve or deny the application within 30 days. After that, borrowers will still be required to make three months of trial payments before the modification becomes permanent.
What about addressing the rising UE and the roll over effect on foreclosures? STILL NOTHING TO ANNOUNCE. STILL.
..…Treasury officials are also working on a plan to give unemployed borrowers a break on payments — possibly for six months — but those details were not expected Thursday. A Treasury spokeswoman declined to comment.
With foreclosures at record-high levels, the Obama administration’s program to attack the crisis has been a disappointment. Only about 66,500 borrowers, or 7 percent of those who signed up, had completed the program as of December…
…The $75 billion program has been such a dud that some housing advocates say the Obama administration needs to rethink its entire approach.
There is some movement on a long awaited angle, the Second Lien program (2MP) finally got someone to sign up! Bank of America on board.
Bank of America Corp., the largest U.S. bank, agreed to modify some home-equity loans through the government’s Home Affordable Modification Program amid criticism from bond investors and consumer groups over the federal effort to limit foreclosures.Bank of America, which handles 14 million home loans including 3 million second-lien mortgages, is the first mortgage servicer to sign a contract committing it to the program, the Charlotte, North Carolina-based company said today in a statement. Chief Executive Officer Brian Moynihan made a “verbal commitment” to the program during a meeting with Treasury Secretary Timothy F. Geithner earlier this month, the bank said.
“For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment,” Barbara Desoer, president of Bank of America Home Loans, said in the statement…
And they continue to play head games with homeowners on whether or not they wll address the collapse in equity which is causing a negative feedback loop of walkaways. The damage is done, trying to prevent moral hazard of walkaways now is closing the door after the horses, cows, mice everyone has left the barn.
First they say, no plans for principal reduction, then 7 days later tell BusinessWeek there are plans for principal reduction:
Despite increasing pressure to take more aggressive steps to keep troubled borrowers in their homes, the Obama administration said Wednesday that it had no immediate plans to alter its foreclosure-prevention program by increasing its reliance on reducing loan balances.
The administration’s statement came as attorneys general and banking regulators in 14 states warned that policy makers needed to do more to stem the tide of foreclosures.
The Obama program, announced in February as a cornerstone of the administration’s efforts to stabilize the housing market, has been running into increasing criticism as delinquencies have mounted. The program has focused on reducing loan payments to affordable levels through interest-rate reductions and other changes in loan terms. But state officials and others say it needs to address falling home prices through principal reductions because many homes are now worth less than their mortgages.
“The failure to reduce principal jeopardizes the sustainability of loan modifications,” Mark Pearce, North Carolina’s deputy banking commissioner, said at a briefing for reporters….
Then 7 days later they are ‘working on it’, but still nothing but a bunch of noises on the walk aways:
The Obama administration’s $300 billion Hope for Homeowners program may be retooled to help the growing number of Americans who owe more than their properties are worth as current anti-foreclosure efforts fail to account for these “underwater” borrowers.The changes would be at least the third lease on life for the program, which began in October 2008 during the Bush administration and has so far helped just 96 of the 400,000 homeowners originally targeted.
The U.S. Federal Housing Administration is considering ways to make the program more effective, Commissioner David Stevens said in an interview. While he wasn’t specific about any changes, he said Hope for Homeowners could be expanded to more directly help borrowers with negative equity….
…There will have to be more efforts to reduce mortgage principals, as 42 percent of borrowers may be underwater by the end of the year, said Karen Weaver, the global head of securitization research at Deutsche Bank Securities Inc. in New York.
“At the end of the day we’ll see more of it, because the government’s attempt — through modifications and the schemes and paradigms that have been in place — I think anyone has to conclude has been a failure,” Weaver said in a Bloomberg Television interview.
“I don’t think we’ve seen the last of government policy trying to address this.”