Mortgage modifications are not living up to the hype created by, well, the mortgage companies.
My friend April Charney, of Jacksonville FL legal aid, has been the leader in the fight for consumers and in forcing mortgage companies to prove they have the right to foreclose.
With permission, I reprint an email from her on this:
Summarized below is the data from the OCC / OTS 4th quarter/2008 metrics report on first lien mtg performance:
1. 2.4% of prime mtgs were seriously delinquent reflecting a doubling of the 1.1% seriously delinquent as of 3/08
2. 41 to 46% of the loans modified in 2008 that were seriously delinquent (past 90 days – 60 plus the 30 initial days) re-defaulted and “trend” expected to continue.
3. One reason cited for high re-default rates after loan mod is the capitalization of missed piti into the loan balance.
4. Another reason cited for high re-default rates after loan mod is the servicing agreements (the PSAs)…these servicing standards are said to have relaxed, but no source data to support this statement from servicers.
5. Re-default rates lower for loan mods that lowered monthly pymt obligation such that a 10% decrease in mo pymt obligation resulted in a 23% re-default rate (compared with a 51% re-default rate for loan mods with no pymt amt change and a 46% re-default rate for loan mods with increased pymt obligations)
6. The new catch phrases are “home retention” and “sustainable and affordable mortgages”.
7. Every bank and thrift must “assess their 2008 loan mods” (those already completed) “to ensure that criteria applied to those loans AND TO LOANS MODIFIED IN THE FUTURE RESULT IN MODIFICATIONS THAT ARE AFFORDABLE AND SUSTAINABLE.”
And, below is a summary of the ANALYSIS OF SUBPRIME MORTGAGE SERVICING PERFORMANCE – data report no. 2 issued by the State Foreclosure Prevention Working Group issued 4/2008:
1. The report is based on servicing performance data from 10/07 – 1/08 (so not as helpful but report indicates the data is nearly unchanged from 10/07 to 1/08)
2. 7 of 10 seriously delinquent borrowers (remember that is 60 plus the 30 days to equal 90 days delinquent at time of reporting by servicer) are not included in any loss mitigation (now home retention) process – suggests “systemic failure of servicer capacity…”
3. 66% of all loss mitigation efforts not complete in a month.
4. Seriously delinquent loans are “stacking up” on the way to foreclosure.
5. “…it appears that the level of paperwork required is a barrier to preventing unneccessary foreclosures.”
6. “…some of the largest national banks will be providing mortgage servicing data to the OCC on a monthly basis.” – WHERE IS THIS DATA????
(Click here if you want to order a FREE copy of my book, The Consumer’s Guide to Defending Foreclosure.)
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