NY Times- Fees deter loan modification effort

The New York Times reports on the impact that servicing fees have on a lender's willingness to modify a mortgage or otherwise assist a homeowner facing foreclosure.

Although the White House is calling on lenders to assist borrowers,

"industry insiders and legal experts say the limited capacity of mortgage companies is not the primary factor impeding the government’s $75 billion program to prevent foreclosures. Instead, it is that many mortgage companies are reluctant to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans."

What's going on?

Legal experts say the opportunities for additional revenue in delinquency are considerable, confronting mortgage companies with a conflict between their own financial interest in collecting fees and their responsibility to recoup money for investors who own most mortgages.

“The rules by which servicers are reimbursed for expenses may provide a perverse incentive to foreclose rather than modify,” concluded a recent paper published by the Federal Reserve Bank of Boston.

It's not a pleasant self- portrait that the mortgage industry is painting. But it goes hand in hand with the comments we get from potential borrowers that they can't modify their loans or get a new mortgage to replace the old when market values have declined. No one ever accused the mortgage industry of being altruistic, but good business sometimes requires that you protect your customer base, too.

One thing seems to be clear-- until home values begin to rise and people go back to work, we're go to see more mortgage defaults.

Read the full article Lucrative Fees May Deter Efforts to Alter Loans

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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NY Times Six: Errors on the Path to the Financial Crisis

Alan S. Blinder, a professor of economics and public affairs at Princeton and former vice chairman of the Federal Reserve points to what he calls the Six Errors that have brought us to the question-- "WHAT’S a nice economy like ours doing in a place like this?"

As the country descends into what is likely to be its worst postwar recession, Americans are distressed, bewildered and asking serious questions: Didn’t we learn how to avoid such catastrophes decades ago? Has American-style capitalism failed us so badly that it needs a radical overhaul?

Blinder believes those six errors to be: wild derivatives, sky-high leverage, the subprime surge, fiddling on foreclosures, letting Lehman go under, and mismanagement of TARP.

It didn't have to happen, he believes, but it did and he explains why.

Read more here.

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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Mortgage rates down, but can you get one? - Inman News Report

Inman News reports a rise in mortgage applications as interest rates have fallen "since the Federal Reserve said it would spend $600 billion to buy mortgage-backed securities and debt issued by Fannie Mae, Freddie Mac and Ginnie Mae, but tightened underwriting standards mean many people won't be able to take advantage of them."

"The Mortgage Bankers Association said applications for refinance loans shot up 203 percent on an adjusted basis for the holiday-shortened week ending Nov.28. Applications for purchase loans were up a more modest 38 percent."

"But," warns the report, "tightened underwriting standards will disqualify many with less-than-stellar credit scores, and an estimated 12 million homeowners who owe more than their homes are worth may also find it difficult to purchase or refinance a home."

Well, here's to anything that gets this market going. It's worth a wait and see attitude.

Reprinted with permission of Inman News.

Stephen M. Flatow

Vested Title Inc.,648 Newark Ave., P.O. Box 6453, Jersey City, NJ 07306
Tel. 201-656-9220. Fax 201-656-4506.

E-mail vti@vested.com. Web www.vested.com

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