Based on a second-quarter assessment of the 10 largest servicers participating in the Making Home Affordable Program, the U.S. Treasury Department plans to continue to withhold incentives from Bank of America and JPMorgan Chase. They two lenders have failed to show “substantial improvement” in borrower outreach, borrower evaluations and program reporting, said a Treasury spokesperson, who allowed that “some improvements have been made.” Wells Fargo, which was also punished last quarter by the withholding of incentive payments, has been upgraded to “moderate improvement” and will begin receiving incentive payments for Making Home Affordable loss mitigation[1].
Freddie Mac is the Treasury’s compliance agent for these programs and that conducts the performance assessments. This morning, a report surfaced indicating that BofA and JPMorgan Chase, among other U.S. lenders, will soon be sued by the Federal Housing Finance Agency (FHFA), which oversees the government-controlled GSE[2]. The FHFA hopes to recoup more money on toxic mortgage securities by arguing that BofA, DeutscheBank, JPMorgan and Goldman Sachs failed to perform legally-mandated due diligence on mortgage securities. It is not demanding a buyback, but rather “reimbursement for losses on the securities held by Fannie Mae and Freddie Mac.” All four of the lenders’ stocks fell in value this morning. All four of the lenders also declined to comment on the potential lawsuit and the Treasury’s ratings.
Do you think that there is too much overlap in federal programs and their supervision of lenders? Is there any way to actually make this system work again?
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[1] http://www.dsnews.com/articles/treasury-withholds-making-home-affordable-incentives-from-two-servicers-2011-09-01
[2] http://www.bloomberg.com/news/2011-09-02/bank-of-america-shares-slump-on-concern-of-lawsuit-by-u-s-finance-agency.html
When the Courts of Public Opinion rule the judicial branch instead of private state unions with only elitists attempting to re-establish the Aristocracy, Then, and only Then will the US return to what the Founding Fathers intended for this Nation and her Member States. Class wars are coming, so you better have a real skill or Trade and know how to barter if you want to survive the coming civil riots.
The fed needs cash.
The short cut is lawsuits to settlement.
All that is needed is a good enough reason that seems reasonable.
Fanny and Freddie should have done their own homework. After all if I want to sell you some snake oil to fix your car problem then shouldn’t you have some of the buyer be aware going on?
This deal is F/F saying wow these houses are so upside down… how can we get rid of our loses. “OH! lets dump the difference on the banks. Then our books will look good again. And of course, so will we.”
Until they put some teeth behind the words ( serious jail time) this program will expire and no one will care . The original estimate was 9,000,000 ( higher now) of home owners who could be helped. It takes approx start to finish 72 man hours to complete a New loan submission today. yet the average B of A or chase loan mod takes 9 months. Really??? An experienced underwriter and processor could approve 6 files a day so to date that 1 team could have 3,900 approvals since the program rolled out. ….Oh yea but that assumes I actually want to do it!
I don’t think there is any incentive for banks to work a loan mod. It would not surprise me if they have more to gain by foreclosing. They get to deduct the loss, probably get compensated for it as well in the buyout b.s. then get to go after a deficiency and resell the property to boot! Why not get rid of the current homeowner? I just don’t believe any of this is in the best interests of the working public. I also hate how if you actually can pay for your underwater mortgage, you’re expected to hang on to it, no matter how upside down you are, but if you royally screwed up, they’ll consider helping you! WTH??? This is America? I guess if I quit my job we’ll get a loan mod and the kids can qualify for financial aid. There’s really no incentive to try and hold your head up above water in the working middle class.
The way the securitized trust are structured there is a special servicer that takes over upon an event of default; And their fess are twice those of the regular servicer. This means there is no incentive to modify a mortgage. From their perspective it is good business to keep the loan in default for as long as possible and suck out more fees.
Helping the homeowner would mean writing down the note to the current market value and starting over. Banks casued the problem so they should bear the burden of fixing it…or be allowed to fail just as any other business.