"lenders were more likely to offer a modified loan that resulted in a higher, not lower, monthly payment"
I may not be able to offer much commentary, readers, I am so pissed off!!
"Reworked mortgages not working; Even after help, homeowners end up back in default" by Jenifer B. McKim, Globe Staff | December 9, 2008
More than half of delinquent borrowers who had their mortgages reworked earlier this year to avoid foreclosure were behind on their new loan payments after just six months, a federal regulator said yesterday.
John C. Dugan, US comptroller of the currency, told a housing forum yesterday that data his agency is collecting show the increase in repeat defaults by homeowners is "remarkably high."
"Put simply, it shows that over half of the loan modifications seemed not to be working after six months," Dugan said.
The findings raise several major questions for government and lending industry executives as they struggle for a fix to the nation's foreclosure crisis: Are lenders not doing enough to modify loans so delinquent borrowers can afford them? Or, are too many borrowers just not cut out to be homeowners and shouldn't be bailed out of their debts?
Are you KIDDING ME? Yup, EVERY CORPORATION UNDER the SUN is getting a bailout, but YOUR PROBLEMS are YOUR FAULT, homeowner!!! How many times you gonna TAKE BEING SHAT ON by BANKS, Amurka?!!
Dugan said his agency is asking lenders and their representatives why these redefault rates are so high. But many housing advocates and industry specialists said they already know: Lenders are failing to give troubled homeowners affordable long-term fixes. In fact, lenders were more likely to offer a modified loan that resulted in a higher, not lower, monthly payment, according to a recent report by analysts at the financial services company Credit Suisse.
Ask LaWanda Fils. This single mother was behind on payments on her Dorchester two-family home when she asked for help from her lender, Option One Mortgage Corp. The solution Option One offered didn't seem to make sense - she would pay $800 a month more, after rolling in past-due principal, taxes, and insurance. Desperate to save her home, Fils agreed to the deal anyway in February.
Two months later, she defaulted and now is again facing foreclosure. "I think it is more for them to pat themselves on the back to say at least they tried," said Fils. "It's not feasible and it doesn't work and they end up having people falling behind."
Option One declined to comment.
Loan modifications can take several forms. Lenders can either reduce the mortgage's interest rate, which results in a lower payment; they can write off some of the unpaid principal, which could either lower monthly payments or lower overall debt; or they could postpone some of the debt or extend the life of the loan, which may lower payments in the short term, but drive costs over the life of the loan higher.
Translation: Either way, the BANKS MAKE OUT and YOU are FUCKED, 'murkn!
A loan modification can result in a higher payment if lenders roll back into the note unpaid principal, as well as interest and escrowed taxes, according to Faith Schwartz, executive director of Hope Now, a private sector alliance of mortgage servicers, counselors, and investors that is coordinating loan modifications.
"They tried to help them, but they could have foreclosed as the alternative," Schwartz said. She added lenders should examine the federal data to see which approach works and which doesn't. "It doesn't mean they didn't get a lower rate."
Even some professionals in the lending industry are mystified at why so many companies are charging delinquent borrowers more in a modified loan when they clearly could not afford the original, lower amount.
"I don't know why a lender would enter into that kind of agreement knowing what the outcome would be," said Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association. "Why would it not go into foreclosure? Why would it not fail?"
Umm, it was DESIGNED TO FAIL!! Please GET a CLUE, AmeriKa!!!!
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Other specialists said the problem is as much the homeowners. Paul Willen, an analyst for the Federal Reserve Bank of Boston, said too many borrowers simply cannot afford to own their homes.
Oh, I see: it is YOUR FAULT, homeowners!
"Many of the people in the foreclosure process are in deep, deep trouble. They are not a modified loan away from financial happiness," said Willen. "Many people who are heading into foreclosure don't need a modification, they need an exit strategy."
How about the government take the other $350 BILLION and PAY OFF EVERYONE'S MORTGAGES!!! How about that "exit strategy?"
