Immanuel
Gold Member
- May 15, 2007
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Maxine Waters is talking about loan modification agreements under the Home Affordable Mortgage Program (HAMP). I've had some involvement in this area so I hope I can shed some light on this issue.
GHook93 said:I am against forcing the banks to make new loans to people who can't afford them. However, for the loans that are currently out there, the banks should be forced to accept most reasonable short sales. A borrower shouldn't have to be close to bankrutpcy, late on the mortgage or in serious financial troubles. The bank need to take a hit also.
The banks should also be forced to give borrowers loan modification. Part of taking TARP bail out money was so they would give loan mods. The banks have done everything possible to avoid loan mods. It's disgusting. If a loan mod makes the home affordable, then it should be done!
HAMP is a voluntary incentive-based plan. This means servicers have either chosen to participate, or must do so because the loan is Fannie/Freddie backed, or the servicer has been provided with TARP bail-out money.
HAMP eligibility for homeowners is limited to a cut-off. Homeowners who have no chance of affording their payments are ineligible. HAMP loan modifications are only for borrowers on the line. This is critical: HAMP loan modifications are only possible when the modification would be cheaper FOR THE BANK than a foreclosure. This means HAMP is designed to save banks money AND prevent borrowers who might recover from losing their homes.
Both servicers and investors receive incentives. This means several thousand dollars per modification, and more upon a successful sustainable modification.
Final HAMP eligibility is analyzed under the Net Present Value test. Unfortunately, these NPVs are hidden from the consumer and even the judge.
The banks have been terrible at organizing and implementing HAMP. They fall behind on deadlines and fail to provide timely NPV analyses. As a result, people are unable to get the loan modification analyses to which they are entitled. I've seen HAMP criticized by US gov't experts assigned to explain it to lawyers at CLEs. Its a poorly designed program with weak enforcement mechanisms.
Waters is absolutely right. The servicers are engaging in bad faith business practices and inequitable behavior. More critically, they are COSTING THEIR INVESTORS MONEY.
And that gives her the right to use the Taxing Authority of the United States as her own personal weapon?
Hell, if she gets away with this, what industry is safe from her abuses?
Immie