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Thursday, November 26, 2009

Mortgages: Few Permanent Mods

by Calculated Risk on 11/26/2009 08:53:00 AM

One of the keys to the housing market is the success of the modification programs. The Treasury Department is expected to release a key measurement next month: the number of permanent modifications for the Making Home Affordable program.

Scott Reckard at the LA Times has an overview: Few mortgages have been permanently modified

Loan-modification limbo is of high concern these days ... even after reporting this month that trial modifications had topped 650,000, the government still hasn't said how many of those loans have been permanently restructured. ...

"You can't claim victory at 500,000 trial modifications and then have half of them drop out," said Paul Leonard, California director for the Center for Responsible Lending, a Durham, N.C.-based advocacy group.
Exactly what is holding up the conversions depends on whom you talk to.

"Getting these loans to the finish line is tough" for loan servicers, Chase Home Lending Senior Vice President Douglas Potolsky said ... The main obstacle, he and other bankers said, is borrowers who don't properly complete their paperwork.
Getting income documentation is a major problem now that the era of "low doc" and "no doc" loans is long gone, [Sam Khater, an economist with mortgage data firm First American CoreLogic] said in an interview.
We will know more in December, but it might not have been a great idea to loan the money first, and then qualify the borrowers.