What a Surprise- "Banks aren't modifying loans" says Treasury

Something many of our readers are familiar with is now news at the New York Times. "U.S. Will Push Mortgage Firms to Reduce More Loan Payments" is the headline of today's story. It continues,

The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering.

“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.”

To those who have been frustrated dealing with mortgage companies, such as Wells Fargo, in requesting a modification or approval of a short sale, for that matter, this may come as welcome relief.

Will Treasury be effective? Doubtful, my personal experience on behalf of a client dealing with Wells Fargo indicates that Wells is blaming Freddie Mac for the hold-up in approvals. Unless the ultimate investor is pressured, don't expect any relief; you just can't embarrass these guys.

Read the full article.

For your next title order,
or if you have questions about what you see here,
contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Wall St. Finds Profits by Reducing Mortgages - NY Times

The New York Times now reports on something we have previously written about, the profits being made by traders buying mortgages at steep discounts, reducing their principal balance and then refinancing the loan. The difference between the discount and the payoff is substantial, and great profits are being made.

Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.

What's different about these loans is that the new loans are made through government programs.

Here's how it works,

For instance, a fund might offer to pay $40 million for a $100 million block of mortgages from a bank in distress. Then the fund could arrange to have some of those loans refinanced into mortgages backed by an agency like the F.H.A. and then sold to an agency like Ginnie Mae. The trick is to persuade the homeowners to refinance those mortgages, by offering to reduce the amounts the homeowners owe.

But there's a risk, again for the taxpayer as there is no assurance the new loan--this time government guaranteed--will be paid.

So, the taxpayer funded bailed out lender who dumps a mortgage takes a hit, and a speculator makes a mint. Can someone explain why the original lender cannot make the same deal for the homeowner, i.e., reduce the balance, and assist the borrower in getting new financing that takes the loan off the books?

Read the full article.

For your next title order
or if you have questions about what you see here,

contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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