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Loan Modifications Are A BustCategory: Real Estate News | Permalink Published: Tuesday, March 16, 2010 It is a well known fact that lenders and loan servicers have a marked aversion to loan renegotiations. Lenders do everything they can, and often deliberately avoid doing anything at all, to escape direct contact with the borrower. Federal incentives to encourage loan renegotiation have had low-level and mixed successes, at best; at worst, the loan modifications that result tend to lead to eventual foreclosure. The vast majority of homeowners who do achieve some form of loan modification are unable to reduce (cram down) the balance on their loans, and most redefault on their modified mortgages within six months. It is an equally well-known fact that foreclosure is an expensive process for lenders and, under 2010 resale market prices, dramatically more expensive and (once initiated) unstoppable than any lost income from an individual loan modification. This second fact has led to some confusion among policy-makers and economists, who cannot comprehend lender rationale for avoiding loan modifications. A variety of economic hypotheses exist to explain lender aversion towards modifications, but policy makers are only beginning to comprehend the basis for this somewhat counterintuitive situation. One of the most common explanations for the general failure of mortgage holders to renegotiate real estate loans in the face of high foreclosure and real estate owned (REO) resale costs is the high degree of securitization in the current mortgage markets. As loans were bundled into pools funded by Wall Street bankers' issuing mortgaged-backed bonds (MBBs) to thousands of investors, and ownership within the pools was divided between assorted parties (tranches) with differing priorities for claims on principal and interest, it became more difficult for those assorted tranches to agree to act in unison to prevent foreclosure, even when such an action was in their best interest. Much current policy, such as the federal Making Home Affordable (MHA) Plan, is based on this theory: if the road is cleared by small incentives, economists seem to say, lenders will rush to help buyers, and help themselves in the process. My goal is to help as many people as I can by given them some options before they walk away from their homes or even answer any questions you have on the list below.
Other Recent ArticlesTemecula luxury homes for sales that include equestrian property are popular among new buyers in the Temecula Valley area. With the central location and local amenities buyers can find exactly what they are looking for in a luxury home or equestrian property in Temecula. Renderings of Three Homes in Westlake Village in EncinitasCategory: Real Estate News Published: Tuesday, January 24, 2012 Renderings of three beautiful homes in Westlake Village The Temecula Wine County offers homes with larger acreage perfect for growing delicious grapes and raising beautiful horses. Equestrian homes for sale in Temecula are a wonderful investment with incredible views of the area and the space to enjoy entertaining and riding. Short sale homes in Menifee offer an even more attractive price and are sought after by families looking to move to the Temecula Valley and investors wanting to make a profit with a short sale home in Menifee. Short Sale Homes in Temecula Valley Attract InvestorsCategory: Short Sales Published: Wednesday, January 11, 2012 Short sale homes usually sell for less than their original value and can make an easy profit for investors. Even after minor repairs, homes are still sold at profit. The Temecula Valley is attractive for short sales investors due to Valley’s location between large cities of San Diego and Los Angeles. |
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