First it was the banks, then it was the mortgage giants, and now it is real estate speculators who invested in multiple properties before the crash who are set to receive a taxpayer bailout.

Bloomberg News reported that in the Obama administration’s effort to prevent large swaths of foreclosures from destabilizing neighborhoods, it is expanding the Home Affordable Modification Program to landlords for up to four properties. The program, first introduced in 2009, pays banks to cut interest rates, elongate mortgage terms and, in some cases, forgive some principal debt.  However, HAMP has yet to provide aid to as many borrowers as hoped. [more]

Loan modifications are declining to the point where eventual foreclosures for distressed U.S. homeowners are becoming all but certain, if somewhat delayed, according to a report from Fitch Ratings, released yesterday. Just 36,500 mortgage modifications were completed in December 2010, down from a high of 86,500 in April 2009, the report says, and Fitch says it expects the majority of those modified borrowers to default again within one year, which could lead to another spike in foreclosures. TRD [more]

The Obama administration’s $75 billion foreclosure prevention program has been widely criticized for its failure to, well, prevent very many foreclosures, and ProPublica has been investigating why the program has come up short. According to the publication, one major factor has been a possible “fatal” lack of oversight by the Treasury Department, which said this week that it doesn’t have the power under the Home Affordable Mortgage Program, known as HAMP, to punish mortgage servicers for denying loan modifications without cause. [more]

A government evaluation of the Home Affordable Modification Program found it once again to be lacking, according to CNN. HAMP has undergone tweaks since it was introduced in April, but in a recent report, the Congressional Oversight Panel found little improvement in its performance. Instead of helping close to 4 million struggling mortgage borrowers keep their homes, HAMP will prevent only about 700,000 to 800,000 foreclosures. “I think the program has turned out to be a lot smaller and have a lot less impact than we thought it would,” said Ted Kaufman, the former U.S. senator from Delaware who is now chairman of the Congressional Oversight Panel. [more]

Record-low mortgage interest rates helped to further stabilize the housing market over the past month, according to the latest “Housing Scorecard” released by the Obama Administration yesterday. While new and existing home sales stuck at lower levels than those seen prior to the expiration of the homebuyer tax credit, prices have stopped slipping after 33 consecutive months of declines, the report says, and in the second quarter of 2010, U.S. homeowners gained $95 billion worth of home equity. TRD [more]

Unemployed mortgage holders will soon feel a little relief, according
to National Mortgage News, thanks to a new federal program that began
this month. Under the relief plan, borrowers who have been collecting
unemployment benefits for at least three months can be afforded a
forebearance plan that will defer their mortgage payments. All mortgage
servicers will be required to participate in the Home Affordable
Unemployment Program, affording forebearance to those mortgage holders
who have not missed three or more payments. Borrowers whose loans are
owned by Fannie Mae or Freddie Mac do not qualify for the program. [National Mortgage News]

[more]

Poor oversight by the Treasury Department and errors by servicers has led to what may be thousands of homeowners being wrongly denied mortgage modifications under the Obama administration’s Home Affordable Mortgage Program, a government audit has revealed. According to the Government Accountability Office report, “15 of the largest 20 participating servicers [in HAMP] did not comply with various aspects of program guidelines,” when determining which borrowers were eligible for modifications. That determination is supposed to be made based on a calculation using factors like the borrower’s income and equity in the home, but the process is beset with errors, in part because the Treasury Department has failed to issue specific guidelines and standards for servicers to follow, according to the Huffington Post. The number of struggling homeowners rejected from HAMP in error “could range from a handful to thousands,” the report says, and yet the Treasury “has yet to establish specific consequences or penalties for noncompliance,” and has issued no fines. [Huffington Post]

[more]

Poor oversight by the Treasury Department and errors by servicers has led to what may be thousands of homeowners being wrongly denied mortgage modifications under the Obama administration’s Home Affordable Mortgage Program, a government audit has revealed. According to the Government Accountability Office report, “15 of the largest 20 participating servicers [in HAMP] did not comply with various aspects of program guidelines,” when determining which borrowers were eligible for modifications. That determination is supposed to be made based on a calculation using factors like the borrower’s income and equity in the home, but the process is beset with errors, in part because the Treasury Department has failed to issue specific guidelines and standards for servicers to follow, according to the Huffington Post. The number of struggling homeowners rejected from HAMP in error “could range from a handful to thousands,” the report says, and yet the Treasury “has yet to establish specific consequences or penalties for noncompliance,” and has issued no fines. [Huffington Post]

[more]

Queens homeowner Alex Lam was up-to-date on his mortgage payments until recently, when he tried to apply for a loan modification under HAMP, the federal Home Affordable Modification Program.

When Lam contacted his loan servicer, Washington Mutual, to ask how to take advantage of the federal program, he was told that he’d only be eligible for a loan modification if he temporarily stopped making his payments.

So that’s what he did. But he was not offered the permanent modification he’d been hoping for. Instead, his home was foreclosed on, though the lender said that wouldn’t occur, said Ted De Barbieri, a staff attorney at the non-profit Urban Justice Center, which is filing a lawsuit today against the lender on behalf of Lam and two other Queens homeowners.

“Listening to the advice of his lender, he stopped making payments and went into default,” De Barbieri said. “In addition to the deceit around telling him to stop making payments, they told him the home would not be foreclosed on.”
[more]

Citigroup is joining Bank of America and JPMorgan Chase in the Obama administration’s second mortgage modification program, the company announced today. The program, part of the government’s $75 billion loan help plan, is aimed at so-called piggyback lenders, or those who granted loans to even the least credit-worthy customers for their down payments during the housing boom. Participating lenders will be given incentives to lower payments on second mortgages or to eliminate them entirely. The hope is that lenders who have resisted modifying primary mortgages because they didn’t want to be stiffed on their piggyback loans will now be more willing to grant modifications. Citigroup is already a participant in Obama’s Home Affordable Mortgage Program, which targets primary mortgages. [AP via Crain’s]