patrick.net

     It appears that the Obama administrations mortgage modification plan is having little effect on getting the mortgage servicers to act on modifying the mortgages of homeowners in default. Obama seems to have had the right idea, that being money in the pockets of the servicers would be what would be needed to get their attention, it is just that he didn’t offer enough.  Apparently the servicers have more incentive to drag the process out rather then to either modify or foreclose even with the government largess. The implications of the extension of the process of could be very broad in that the servicers out of their own self-interest are extending the foreclosure process and thus keeping houses off the market.  The banks are likely doing this also by either not foreclosing or not marketing their foreclosures but for different reasons.  Since they don’t have to mark to market their loans they have no incentive to put the really underwater houses on the market. They can trickle onto the market the "least bad" houses        ( loans) while keeping the deepest underwater houses either out of foreclosure  and or off the market.  All this is keeping prices from falling faster, how long this can go on is anybodies guess. Given the above it would seem that number of actual foreclosures is not a good indicator of the future of the housing market but rather the Notice of Default numbers might be a better indicator for the further out years

 

 This week, the Obama administration summoned mortgage company executives to Washington to demand they move faster to lower payments for homeowners sliding toward foreclosure. Treasury officials called on the companies to hire and train more people quickly to field applications for relief.

But industry insiders and legal experts say the limited capacity of mortgage companies is not the primary factor impeding the government’s $75 billion program to prevent foreclosures. Instead, it is that many mortgage companies are reluctant to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans.

Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are ultimately sold in foreclosure. So the longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue — fees for insurance, appraisals, title searches and legal services.

 link to the entire article which should be read to get the full impact

http://www.msnbc.msn.com/id/32214198/ns/business-the_new_york_times//

#politics