interesting excerpt…only 51 principal reductions!

Lawmakers expressed frustration with the lack of traction the administration has gotten from its mortgage modification efforts, saying they fell short of what was needed to counteract the millions of foreclosures in the pipeline.

Allison said the program needed to get on track to accomplish 3 million to 4 million loan modifications by the end of 2012, or about 20,000 per week.

Another program in which lenders accept principal reductions to refinance homeowners into government-guaranteed mortgages has stalled, with only 51 loans refinanced.

WASHINGTON, July 16 (Reuters) – The Obama administration is looking at ways for homeowners who have defaulted on their mortgages to remain in their homes as renters, senior administration officials said on Thursday.

U.S. Treasury assistant secretary Herbert Allison told the Senate Banking Committee that the idea was one of several options under consideration for homeowners whose mortgages can’t be made affordable through modification.

“It’s certainly an idea we are thinking about,” Allison said.

William Apgar, senior mortgage finance adviser for the Department of Housing and Urban Development, said the administration was exploring a “wide range of options along these lines.” However, he said a key obstacle is that homeowners who have gone through the anguish of delinquency and foreclosure often don’t want to stay in the property as renters. (Reporting by David Lawder; Writing by David Lawder and Tim Ahmann; Editing by James Dalgleish)

{Hi guys, just to let you know i made 14 offers for one couple and they havent won an offer yet. They even went $30,000 over on one of the offers !!! }

Yeah, those “bottomed” homes are getting multiple offers, but how many of them will actually close and change hands? Unless it’s all cash wheeling and dealing in the 909/Moreno Valley/Inland Empire etc., then the banks are going to be going over those properties with a fine toothed comb. I’ve heard many a tale about a deal being all set, but the bank won’t fund because the property appraisal/BPO/valuation comes in far below the agreed upon selling price.

It just makes me wonder how long the banks can delay dumping enormous numbers of homes. If he Geithner pub/private plan goes thru the fast money with only token amount of skin in the game could really accelerate the liquidation process

There should be more than enough information in this article alone, as well as the Deutche Bank analysis that was linked to in one of the earliest comments, to enlighten anyone.

hello, are you kidding? How about unemployment? The state of California going under? Use your brain. You’ve waited this long, do you really think prices are going to bounce back up? What’s six months? Nothing.

Is there something specific you are basing your ‘6 month’ forecast on? I need something tangible to share with the wife…

While I understand loan mods take a variety of forms (interest rate deductions, extended terms, etc.), most bloggers I have studied seem to say that the interest rate modifications to the extent they can be done, have been done. Extended terms saves only a few hundred a month, and the other “modifications” are just to extend Option Arm type loans. Most blogs imply the only way to save the crisis is a principle reduction.

However, to your point if it is an ARM about to Recast it would help. Again, however, my point is that if the lender takes it in the chin and refies at 100% or worse yet 125% loan to value, what happens if the property takes another 20% hit. The owner is under or close to under already. We have all just delayed the inevitable.

I go back to my original premise. Bang for the buck. There is a market and an economic justification for lenders to initiate the foreclosure process on pricier homes, but lenders seem to be foregoing that in lieu of keeping the loans on their books despite 0 cash flow or even negative cash flow (ie. this 1M house is only going to be worth 800K a year from now so their inaction effectively cost them 200K in value)

If that’s a 30 year fixed it makes little sense for the bank to eat it with PR.

But if there’s a recast in 2010, and despite the likely temporary rate drop the borrower is squeamish and entertaining walking, perhaps a mod in the form of converting the ARM to a fixed is a reasonable approach to avoid foreclosure.

If the borrower approaches the bank and the bank flat out rejects a mod, then perhaps it’s time for that borrower to “free up” the home for the “droves” of qualified buyers sitting on the sidelines [translated, foreclose and send the home into the shadows].