Upside Down Mortgage

Archive for June, 2007

Subprime Deregulation

Question: when did deregulation start?

Does anyone have a year, or a bill that dismantled the effective system before deregulation?

I'm currently writing an essay on how did deregulation effect the economic recession today

I'm kind of lacking on sources too, so if you do find any articles or anything relating to subprime mortgages, the recession, deregulation it would be most helpful . Please & thank you.
Sorry I was unclear, I was trying to ask when did the deregulation of banks and mortgage companies first start to allow people with low income easier access to loans

Answer: You've actually got it backwards. It is the REGULATION of banks and mortgage companies that led to more subprime loans, as the government coerced and berated lenders into promoting home ownership among low income people. In a sense it started with the creation of Fannie May under Roosevelt in 1938.

The modern problems began in the late 1990s under the Clinton administration with a renewed Community Investment Act to coerce banks to lend to low income people, and picked up steam in the last 7 years as Congressional Democrats fought off every attempt to improve regulation to avoid crisis like this.

David Corn Writes On Phil Gramm, Subprime Mess

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Mortgage Modification Agreements

Question: Can the bank cancel my rate modification agreement if i paid accordingly?

I was approved for a rate modification for my mortgage. Paid the qualifing amount and the first payment per the notarized contract i signed. The contract was approved the 1st of November and it began the 1st of December. I made the first payment on the 2nd of November. The representative told me that the first payment would go to my December 1st payment so i made no payment in December. On January 1st my payment wouldn't be accepted because I was kicked out of the program due to non-payment. Since then they won't reinstate the program unless I come up with $20,000. I feel I 've been dooped! A representative told me it looked like the first payment was misapplied and didn't get put in as the first payment due in December. Anyway, there's no way I can get $20,000 any suggestions?

Answer: Banks are bad about receiving a payment early and you not making a payment during the required period each month... I used to do this with my first house, extra each month, and I was way ahead, missed a payment one month while on vacation, and they charged me $150 late fee... this was many years ago, but I learned the rule real fast. Never late on a payment again.

Loan Modification Agreement

Loan Modification Moratorium

The report recently released by the Comptroller of the Currency and the Office of Thrift Supervision showed some startling numbers for the first quarter, made worse by the knowledge that anecdotal evidence shows that the numbers for the second quarter of the year will likely be worse. The problems popping up all over the economy in general in the real estate market appear to be deeper and broader while assistance in the form of The Obama administration’s Making Home Affordable plan has been slow to arrive. Here’s some of the data and what it signifies for the real estate market:

* Serious delinquencies on prime loans, which account for two-thirds of all U.S. mortgages, rose to 661,914 in the first quarter from 250,986 a year earlier, according to the report. Overall, mortgages 60 days or more past due rose 88 percent from last year. Representing $4 trillion in mortgages, any incremental slippage in these numbers translates to major numbers in terms of inventory and dollars.  
* The data shows 5.9 percent of the 21.8 million Fannie Mae and Freddie Mac loans serviced by national banks or thrifts were at least days 30 days late, in foreclosure or subject to bankruptcy, compared with 3.2 percent a year earlier. That’s 1.2 million properties that were struggling in an economy that has worsened since the report.
* Seriously delinquent mortgages (60 or more days past due or involving delinquent bankrupt borrowers) continued to increase across all mortgage categories. Economic contraction continued to weigh on homeowners.
* Foreclosures in process also increased during the quarter to 844,389, or about 2.5 percent of all serviced loans, as moratoriums on foreclosures expired during the first quarter. This increase represented a 22 percent jump from the previous quarter and a 73 percent rise from the first quarter of 2008. Moratoriums continued to expire into the second quarter resulting in benchmark of one million foreclosures being reached in May.

The OCC/OTS report initiated coverage on loan modification metrics. The report gave results on a total of 185,186 loans that were modified in the quarter:

* Almost two thirds of modified loans employed combinations where at least two terms were modified to reduce the mortgage payment.
* Capitalization of delinquent interest, fees, and advances, combined with interest rate reductions and extended maturities were the most common combinations.
* On completed loan modifications, 70.2 percent included a capitalization of missed payments and fees, 63.2 percent reduced the interest rate, and 25.1 included an extended maturity.
* Modifications that reduced monthly payments by 20 percent or more jumped 19 percent from the previous quarter, to 29 percent of all modifications. Studies have shown that loan modifications that lower payments by 20% or more go into default at less than half the rate of those that reduce payments by less.
* By contrast, modifications that increased payments made up only 19 percent of the total, a drop of 25 percent from the previous quarter. Not surprisingly, these types of modification are falling out of favor due to their high re-default rate.

The report indicated that the main cause of foreclosures has morphed from ill-fated and risky subprimes to unemployment and a recessed economy. Considering that both of those areas continued to deteriorate over the second quarter, the next report from the OCC/OTS could be an eye opener.

About the Author:

The Feldman Law Center was founded for the purpose of negotiating mortgage loan modifications on behalf of their clients. Visit feldmanlawcenter.com for more information about loan modification.

Article Source: ArticlesBase.com - Behind the Numbers in the OCC and OTS Mortgage Metrics Summary for First Quarter 2009

California Foreclosure Moratorium Scam - Assembly Bill X2 7