Tuesday, February 8, 2011

Loan Modification Plans Fail, Banks Not to Blame

So it appears that some Congress-critters are agitating about the utter failure that is the suite of government loan modification programs. House Republicans want to repeal the Home Affordable Mortgage Program (HAMP), calling it a "colossal failure". Home Affordable Foreclosure Alternatives (HAFA), a sub-program, is also under attack, and lo and behold, there's a Democrat involved: Sen. Ted Kaufman.

The Treasury Department spent $4.3 million on incentives to servicers and investors through the Home Affordable Foreclosure Alternatives program through November, a fraction of what it spent on HAMP, according to a report from the Congressional Oversight Panel.

It seems only natural that a Democrat would be offended that the government spent too little money. In any event, it's a bipartisan effort in Washington.

But why? Even the government isn't this incompetent most of the time. What happened? And what's likely to happen as a result?



If you're a homeowner who's had some dealings with HAMP/HAFA/whateva, or merely a taxpayer with something of a passing interest in why some $75 billion of your money appears not to be doing much at all in dealing with the foreclosure crisis, you might be curious. Well, let me put some pieces together for you.

Banks Aren't the Problem

In the media and general chitchat, we're told that the problem is the banks who aren't able to get with the program(s) fast enough. Those damn greedy Wall Street bastards! But truth is, unless said bank owns a servicer, it's likely not the problem.

You see, once a mortgage is made ("originated"), the nice loan officer you spoke with isn't dealing with you anymore. His job is to go make more loans. Instead, he passes the mortgage, all of your information, your entire file, to another company called a servicer. The servicing companies are the ones who send out statements, process your payments, send late notices,#mini_module

View the Original article

No comments:

Post a Comment