Banks Modify 9% Of Troubled Mortgage Loans? Cost: 50 BILLION!
“As of July, only 9 percent of eligible borrowers had seen their mortgage payments reduced with modified loans. And the first monthly progress report showed that 10 lenders had not changed a single mortgage.” Source: Yahoo Finance, Mortgage aid program helping fraction of borrowers
The report indicated that lenders such as Bank of America Corp. and Wells Fargo and Co. have lagged behind government expectations. Both banks received billions in federal bailout money. Bank of America modified just 4% percent of eligible loans, and Wells Fargo 6% percent. Wachovia Corp., which was taken over by Wells Fargo in December, modified only 2% percent.
There have been a total of 464,058 repossessions so far this year (through the end of July). And There were more than 360,000 properties with foreclosure filings — including default notices, scheduled auctions and bank repossessions — an increase of 7% from June and 32% from July 2008, according to RealtyTrac, an online marketer of foreclosed homes. In fact, one in every 355 U.S. homes had at least one filing during July.
So far, banks have extended only 400,000 offers among 2.7 million eligible borrowers who are more than two months behind on their payments. More than 235,000 of those borrowers have enrolled in three-month trials.
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Let’s take a look at the reports numbers…. 235,000 on a 3 month trial /divided by 2,700,000 eligible borrowers. NOW THIS HOW THEY GET the 9% being helped figure.. …(actually 8.7% rounded Up to 9%!)
Lets examine WHAT actually is going on here. We have 235,000 borrowers are on a 3 month payment trial period. Those 235,000 borrower’s have received a letter from their BANK giving them a 3 month payment trial to prove they are worthy of a permanent Loan Payment Modification. AND what the BANK doesn’t TELL YOU is that after you have made those 3 trial payments your NEW Permanent Loan Modification Payment MAY be RAISED HIGHER than your 3 Month Trial Payment! That’s right they can RAISE your payment after you have successfully PASSED the TRIAL! So don’t be SHOCKED when you payment is increased at the end of the trial!
AND of those 235,000 borrowers on the trial NOT ALL will complete the trial! So the SUCCESS RATIO of 9% is somewhat Pre-Mature?
AND of those 235,000 loans being modified Only 20%-25% of will have their payments REDUCED! It’s MORE Common to find the payments raised! *
* The Following is from the a BOSTON FEDERAL RESERVE REPORT on Reducing Foreclosures.
* Pg 28…”The authors find that until the fourth quarter of 2008, modifications involving payment increases were more common than those involving payment decreases. In addition, they find that the average and median magnitudes of payment decreases have recently increased from approximately 10
