Fannie Working on Pilot Mod ProgramFederal cramdown legislation that would allow bankruptcy judges to modify mortgages has its supporters and detractors. In other modification news, bankruptcy specialists will debate modifications this spring, while Fannie Mae has reached an agreement with a consumer advocacy group to restructure unaffordable mortgages.
The program involves restructuring mortgages to achieve an affordable payment.
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REOs Ease as Foreclosure Prevention Grows
Mortgage servicers are preventing an increasing number of foreclosures by modifying loans, according to a new industry report. Loan delinquency continued to increase — though repossessions eased late last year.
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Wells Launches Rescue Plan for Wachovia BorrowersWells Fargo Home Mortgage hopes to prevent nearly a half million Wachovia Corp. foreclosures. The company boasts a 70 percent success rate on its modifications.
Modification Statistics and Programs
As mortgage companies commit to an increasing number of loan modifications, more modification firms are popping up. Two groups testified before Congress last week that funds from the Troubled Asset Relief Program should be used to modify loans — with one of the groups calling for cramdowns on as many as 5 million mortgages that are not even in bankruptcy.
BoA Earnings & Originations Worse, Apps Higher
Bank of America Corp. saw quarterly originations decline but said new activity picked up at the end of the year. While earnings deteriorated last year, results might have been worse without the acquisition of Countrywide Financial Corp. The institution said it plans to modify more than a half million loans.
Countrywide Sued Over Denied Modification
Attorneys for a couple who became delinquent on their mortgage and were subsequently foreclosed on are accusing Countrywide Home Loans of claiming in public to be pursuing a diligent loan modification strategy while denying legitimate modification requests.
The Modification Report
Two firms said they are among only 80 approved by the State of California to collect advance fees for helping delinquent borrowers obtain modifications from loan servicers. Other recent modification activity includes banker opposition to cramdown legislation endorsed by one of its own, modification agents being recruited from the ranks of mortgage brokers and a report that calls for federal compensation of servicers.
Citi Supports Cramdowns
Senate Democrats have found an ally in Citigroup Inc. for their proposed legislation to allow bankruptcy judges to modify mortgages. Citi’s endorsement follows an endorsement by U.S. homebuilders — though it is in opposition to the position taken by the country’s mortgage bankers.
FDIC Sells $500 Million Portfolio
A mortgage company run by former Countrywide Financial Corp. executives has acquired more than a half billion dollars in mortgages originated by a failed bank.
The Modification President
A stimulus plan proposed to Congress by President-elect Barack Obama calls for his cabinet to use its existing authority to step up loan modifications. It also proposes that servicers not be held liable for modifications and that bankruptcy judges be empowered to modify loan balances.