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Wednesday, November 11, 2009

WSJ on Permanent Modifications

by Calculated Risk on 11/11/2009 04:30:00 PM

Ruth Simon at the WSJ has some details on permanent modifications: Mortgage Program Gathers Steam After Slow Start

The administration won't release figures on completed modifications until December, but so far it appears that very few trial modifications are becoming permanent, often because of a lack of documentation.
J.P. Morgan Chase & Co. said last week that more than 92,000 of its customers have made at least three trial payments under the program, but just 26% of them had submitted all the required documents for a permanent fix.
At Morgan Stanley's Saxon Mortgage Services, about 26,000 of the 39,000 borrowers in the program have made more than three trial payments. Roughly 500 have received completed modifications.
emphasis added
Diani Olick at CNBC wrote yesterday:
Insiders however tell me that a lot of that paperwork has to do with those so-called "stated-income" loans ...
In my list of possible upside surprises / downside risks for the economy, the percent of permanent modifications is related to the #1 downside risk. If few of these modifications are successful, there could be a flood of foreclosures on the market next year.