Chase Finds 16% of Mods Are 'Permanent’?A recent article highlights that JPMorgan Chase has over 140,000 borrowers in the HAMP program currently, and that only 16% will be or have been approved for “permanent” modification as they announced in Congress. Additionally only 29% of those made all of their payments on time during their 3 month trial and so now are ineligible for permanent mods. Begging the question, so is even the 16% number accurate?This along with other examples of the fallacy of HAMP I have given in the past conjures memories of an advertisement from my youth… “Where’s the Beef”?HAMP sounds nice, People love acronyms, best intentions and all but like so many things in our society these days no one wants to look beyond the surface. We long to be placated. We want to feel better, eat our government endorsed Hostess products and watch dancing with the stars until our Ambien kicks in. All you are required to do is look at two factors to determine HAMP was NEVER going to work as it is currently configured.1. Out of control unemployment. The numbers are staggering and nowhere close to reality when one factors the numbers of people still employed but on reduced hours, or those that have fallen of the unemployment rolls entirely. You can’t qualify if you have no, or even reduced income.2. The amount of mortgages that are upside down more than 10-20% allowable. Borrowers in California, Florida, Arizona and Nevada are doomed even before they announced the program.In all actuality the servicers are making only a half hearted effort in these programs. The lenders know their hands are tied, Congress and the Administration know this as well. The only ones who don’t? John and Sally Homeowner in Eugene Oregon who actually need and think they are going to get a mod. Adding more fuel to the noxious mix of those who know, the vultures who prey on John and Sally. Telling them their lender will take too long, work with us and we will get you your mod…just give us $995. They believe this right up until me or someone like me shows up at the door with the sheriff. Julia Gordon from the Center for Responsible Lending said as much in her address to congress, saying that HAMP had the “theoretical potential” to help but servicers either would not or could not do what is asked of them.What to do? Do we as a nation bite the bullet and “bailout” the borrowers as well. Should we do a white board erase of all current mortgages and start over as some have suggested? Highly unlikely! Can you imagine the lawsuits generated by those who have previously been foreclosed on and are left to wonder “why was I not bailed out”?I am interested in this group’s insight. What would you propose? I have outlined my ideas here in prior blogs so I won’t beat that drum too loudly but these are the basics (how we create jobs is a blog post unto its own).1. Mod only those who can, and quickly. Release all other inventory on to the market regardless of how far values fall.2. Waive the 3 year restriction on all foreclosed or bankrupted borrowers and allow those that are TRULY qualified to re-enter the market.3. Lift restrictions on the amount of properties investors can purchase.What say you?
Chase is just trying to "look good" and make it seem like their involved. I've seen their modification package and I've also seen how they are trying to work with borrowers. The truth is...too little...too late! Just like all the other things that are going on.
Good Points Albert. I'm not personally a big fan of Loan Mods for a myriad of reasons but I would like to see a reasoned focus on easing lending to both qualified home buyers as well as small business.
Some may agree with Jan regarding the market running its course but I’d like to offer a modified version of that statement. I too agree the government should back out of any “direct” involvement in trying to get this market stabilized. However I also realize that just because you want it to be better doesn’t make it so. I don’t think anyone actually believes the government is attempting to benefit from all that’s going on, however some do realize that some of these banks are recognizing benefits(weather those benefits be tangible with actual $, or are intangible and simply a result of minimizing the loss of $ due to funny accounting). As I mentioned in an earlier blog, I don’t think it’s in any one’s best interest for the government to make the decision for the banks, however what could/should be done is an elimination of all these behind the scene deals. One recommendation could be to make transparent company policy as to how criteria should be evaluated, and the government thru the courts or whatever other means (such as the Fed or the SEC) ensure that the policies are being upheld. Now this wouldn’t be simply limited to loan modifications but expanded to small business lending, and in either case this would help to ensure that the participating public is aware of its options before even moving forward. One might question, What does this do for the economy? How does this help us out of our current situation? Well I think it’ll give those homeowners who won’t qualify for loan mods the foresight to move on-meaning take advantage of any opportunity that will allow him/her to move on. Such as trying to negotiate a short sale to save whatever net worth or credit they may still have. Since the short Sale criteria requirements should be a part of bank policy (documented) both the seller and agents should be aware of what the bank will be likely to accept prior to presenting any offer. This absence of ambiguity, will allow the banks to put people back to work-specializing in particular operations. There can be similar streamlining coordinated for the lending process too. The hard part of this recovery as with most recoveries is identifying the actions of those who are trying to benefit via the loopholes. So by tightening up those loopholes and documenting the steps-which should clearly mention the intent of each step-would help to get us back on a course of recovery.
Jesse, I think you are missing the point a bit. Yes, many of us have posted regarding the failure of HAMP for some time. The point is NOT that Chase is just now finding this out. The point is that they again made this announcement...NOW, after all this time to Congress just last week and that Congress is pretending they don't have a clue. Watching the proceedings on C-span was a joke. These numbers have been out there for a while (end of last year) and the banks are still in denial publicly. Meanwhile Congress is pulling a classic Nero. The point of the post was to engage a meaningful discourse from some of the members. To see what the people who live this day in and day out thought and exchange ideas.
Jesse, I also knew that HAMP would never be successful in California. Our home prices have declined 50-60%. There was no way Californians, especially in Riverside County would qualify. I say let the market run it's course. It happened in the 90s and yes, you could pick up a condo in a nice area for 40K, but those same condos appreciated to 250K in 2003. I know, I owned one. The foreclosures sold to people who could now afford them, and the builders started new construction. The same thing would happen again if the government would get out of the way.
ROFLMAO!!!! CHASE IS JUST NOW FINDING THIS OUT! Hello McFly, they are a bit behind the times. I have been reporting for months now that the loan modification fall out is about 73-76%. In fact, if I look back at my blogs, I have been saying this since at least november of '08!
Not to toot my own horn or anything but, gee wiz, this was even reported in industry media back in April or May '09.
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Not to toot my own horn or anything but, gee wiz, this was even reported in industry media back in April or May '09.
Chase....get a clue!