rssYet Another Failure for the Mortgage Modification Program
Wednesday, March 24, 2010 at 5:29 pm
- 18 Comments
President Obama’s mortgage modification program, known as the Home Affordable Modification Program or HAMP, was supposed to be the fulfillment of Obama’s promise to take care of Main Street more than Wall Street. Yet, just over a year into his presidency, Wall Street is on the rise and Main Street — or at least the homes that line it — remains on the decline. Not only has Obama’s $75 billion program failed to secure permanent mortgage modifation for more than 116,000 homeowners (while 3 million went into foreclosure) and not only does the Administration now say it won’t help more than 1.5 to 2 million homeowners overall, there’s actually more bad news: it seems to actively discourages lenders from loan forgiveness.
Shahien Naisiripour of the Huffington Post reports that, despite the fact that the average homeowner owes $1.14 for every dollar in current value (and that’s not strictly HAMP-eligible homeowners, that’s overall), mortgage holders are less likely than ever to forgive underwater homeowners.
Mortgage servicers forgave principal on less than two percent of HAMP trial loans, the report notes. But before HAMP, 10 percent of servicer-sponsored mortgage modifications forgave principal, according to the report. Servicers are incentivized to lower monthly payments by getting cash for every sustainable mortgage modification.”HAMP allows principal reduction, but it is not typically implemented in practice,” the report states.
Mortgage holders receive money for modifications — even those that don’t amount to more than a pittance to homeowners — but they don’t get money for principle reductions, so they no longer look at that as an option. The administration’s newest program to incentivize mortgage holders to agree to short sales, or sales worth less than the outstanding value of the mortgage, likely won’t help, as it will encourage lenders to engage in debt forgiveness only if people give up their homes, rather than engaging in loan forgiveness that allows people to stay in them.
Notably, in the long term, mortgage holders would make more money by forgiving the portion of a mortgage that is more than the market value of a home and continuing to collect payments, rather than accept something less than market value and forgive everything above the eventual sales price — but the Administration’s programs aren’t designed to incentivize that behavior. But if banks take the government payout to do short sales in any significant number, they will end up further driving down housing prices, putting more homeowners underwater and creating a snowballing problem.
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Comment posted April 17, 2010 @ 6:47 pm
If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!
BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled “Piggies” I invite you to listen to this song on youtube and see if it appropriately fits.
http://www.youtube.com/watch?v=MIopI2isIKc&…
Have you seen the little piggies
Crawling in the dirt
And for all the little piggies
Life is getting worse
Always having dirt to play around in.
Have you seen the bigger piggies
In their starched white shirts
You will find the bigger piggies
Stirring up the dirt
Always have clean shirts to play around in.
In their ties with all their backing
They don't care what goes on around
In their eyes there's something lacking
What they need's a damn good whacking.
Everywhere there's lots of piggies
Living piggy lives
You can see them out for dinner
With their piggy wives
Clutching forks and knives to eat their bacon.
Wright vs. Bank of America Lawsuit at: unitedlawgroup.com
When I filed my lawsuit against Bank of America, myself and United Law Group thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath.
Please stand with me and United Law Group and send an email to Bank of America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods.
Divided we might have fell America, but united we must stand!
Please send your email directly to Bank of America and include the following:
1. Your name
2. Your complaint concerning your experience with Bank of America.
3. Please end your email “I support John Wright vs. BofA Lawsuit!”
4. Please send a copy of your email to johns-wright@hotmail.com
5. Please send your email to both BofA link below and the CEO email
BofA Linked Email:
https://www3.bankofamerica.com/contact/?lob=gen…
CEO Brian Moynihan:
brian.t.moynihan@bankofamerica.com
Comment posted May 9, 2010 @ 3:48 am
Please feel free to show your support in your comments at unitedlawgroup.com under the John Wright vs. Bank of America story
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