Forget Loan Mods:Banks Making Millions off Americans Losing Their Homes

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2
Mar

Buffett Investment News/Fact
Did you know that if you invested $10,000 with Warren Buffett in 1965 your investment would be worth roughly around $80 million today.

19
Feb

Mortgage Loan Mods Gaining Traction?

Making Home Affordable Program (HAMP) is "gaining traction" based on figures released by the Treasury Department and HUD. As of the end of January, over 116,000 permanent loan modifications had been signed, nearly double the 66,000 reported at the end of December, and an additional 76,000 had been extended permanent modification offers but had not yet returned the paperwork. 830,000 borrowers are still in some stage of the required three month trial period required by the program guidelines. Mortgage News Daily pointed out, however, that over 57% of loan modifications have been borrowers who are out of work or are underemployed. If those borrowers are unable to get work, those loans might end up defaulting anyway.

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Forget Loan Mods:Banks Making Millions off Americans Losing Their Homes

Posted by: Administrator in OneWest Bank, Obama Plan, myblog, mortgage brokers, loan modification, IndyMac Bank, Home Affordable Plan, Goldman Sachs, foreclosures, FDIC, Brooklyn Troy on Feb 10, 2010

As millions of Americans find themselves unable to afford their home may have attempted to obtain a loan modification. In fact the US Government came out with a Home Affordable Plan, better known as the Obama Plan. For those of you who are not familiar with this program it essentially was created to entice banks to modify the mortgage notes of Americans in order to make their mortgage payments more affordable thus reducing the foreclosures in the US. The problem has been that banks have been stalling on these mortgage modifications and in most cases even unjustly declining them. This video may be the best indicator why. Even though the video focuses on IndyMac, the FDIC, and OneWest Bank, one the public catches wind of this, both mortgage bankers and bankers will have more explaining to do:

http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1076783

For those who don't feel like taking notes, it is a study on the sweetheart deal they cut, complete with an example of a bad $478,200 loan with six months of missed payments purchased at 70% for $334,600. The borrower is forced into a short sale on the property at $241,000, so the loss on the original loan is $244,200. The FDIC pays 80% of the loss calculated from the original price, not reduced 70% reduced price, bringing the loss payment to the purchaser to it to $195,360. So the short sale proceeds plus the FDIC guarantee totals $436,360. Already the profit for the purchaser is $241,000+$195,360-$334,600= $101,760, and on top of this, the original borrower was forced to sign a promissory note for $75,000.

Shocked? Understandably so, I reacted the same way. Obviously profits can be made in this market, that is the premise of Capitalism, but at what expense?