Mortgage Modifications Failing, Sparking More Economic Stress

Despite signs of economic improvement, the foreclosure crisis is far from over. According to a piece of fresh data released on Monday, low levels of mortgage modifications are likely to lead to more foreclosures, and more foreclosures will weigh heavily on the still fragile U.S. economy.

Only 36,500 mortgage modifications were completed in December 2010, 58 percent lower than a peak hit in April 2009, Fitch Ratings found in an analysis of loans packaged into mortgage-backed securities.

Fitch predicted that 60 to 70 percent of modified risky and subprime loans were likely to default again within 12 months. Homeowners are expected to default on another 50 to 60 percent of loans which were modified before foreclosure began, probably leading to an increase in the number of foreclosures.

"The combined efforts of HAMP [the Home Affordable Modification Plan] and other mortgage loan modification programs have made little more than a dent in the large volume of outstanding distressed loans," Diane Pendley, a Fitch managing director told the LA Times.

The AP found U.S. economic stress increased in December because an increase in foreclosures outstripped lower unemployment figures. Foreclosure rates rose in 33 states, the AP reports, with the most dramatic increases in Utah, New Jersey, Nevada and Arizona.

The AP's Economic Stress Index calculates a score from 1 to 100 based on unemployment, foreclosure and bankruptcy rates, any county with a score over 11 is considered stressed. AP found the most dramatic increases in economic stress were concentrated in counties with large numbers of real estate workers:

"The average county's score in December was 10.4, up from 10.3 in November. Slightly more than 40 percent of the nation's 3,141 counties were deemed stressed, up slightly from November.

Nevada was again by far the most troubled state with a Stress score of 22.56. It was followed by Florida (16.47), California (16.36), Georgia (14.5) and Arizona (14.46). Among those five, only Nevada's Stress score rose from November to December.

And once again, the healthiest states were in the Plains and New England. North Dakota had the lowest Stress score in December: 4.65. It was followed by Nebraska (5.38), South Dakota (5.69), Vermont (6.19) and New Hampshire (6.95)."

Comments

[mtstruggle]

06:01 PM on 02/15/2011

I'm in the middle of the struggle... I own a small business and the downturn in the economy hit me hard... so I applied, and applied, and applied... they kept saying they'd help but my home was put on the sell block anyway... I had to get an attorney to keep it from getting auctioned off. I am in the same process again... falling further and further behind in payments.... it is unlikely that anything positive will come of it... You would think that having TILA violations and no note would help... but that only gives them pause... apparently they can violate Federal laws with impunity. HAMP is sooo full of holes that it might as well not exist... In my case the "Investor" chose not to participate....???? The bigger picture is that there isn't anyone looking out for the consumer any more... there aren't any advocates that will ensure our protections.... most of Congress is in the pocket of Big Banks and Investment Companies... they received trillions of dollars... that's why I'm going to start an organization to elect representatives that will hold these crooks accountable... more to come.

[Kenz300]

02:56 PM on 02/09/2011

The BIG Banks and their bankers should thank their lucky stars that the
American taxpayer bailed them out. If not for the American taxpayer they
would have been unemployed and broke. Their banks would have failed and
they would have lost the value of their stock.

They should now be working for $1 a year and trying to help every homeowner
they can. They owe the American economy and the American taxpayer big time.

Instead they are greedy self centered people that have little concern for the struggle
of the average American.

There once was a time in America when we came together and tried to help
each other out of trouble.

Now the greed is good gang wants it all.

[Cookie100]

01:30 PM on 02/09/2011

For anyone who'd like to blame homeowners for this mess, keep in mind,
The Mortgage Bankers Association 'walked away' from their building in DC. When this whole thing fell apart, JP Morgan walked away from 5 huge office buildings in San Francisco citing bad business to keep paying since they couldn't rent the spaces out.
Google all of it, big banks walk away from property all the time, but then they don't have morals clauses, of course because they have NO MORALS

[Cookie100]

01:25 PM on 02/09/2011

Banks have NO motivation to help you in modifying. They would rather punish you by auctioning your home for way less than they could get if they worked with homeowners on their payments.
They have s tolen 80% of the wealth in this country, why isn't America doing what Egypt & Tunisia, England, Ireland, Greece, France and lots of other places are doing?
The power el ite are sc ared of that behavior, believe me. The way things are going, this economy won't last much longer, things must change drastically. Like L loyd B lankfein sitting where M adoff is, exactly that.

[Stan Majorowski]

10:25 AM on 02/09/2011

I made it throught the program and it only took 2 years of trying and in the end all they do is roll all the payments back in to the laon and increase the loan amount and give you 5 years of a lower interest rate and then it balloons back up to where you were before with more debt because now you are paying on the original loan plus all the payments you missed and that is not just principle but their interest too. What a joke it would have been better to just walk away. Also if you have a second it is a separate process and you can try to get it reduced but the only people making money on all this is the banks. There is no real relief in any of these programs and in the end you are not much better off. When I first started to try to do this I was told on the first day the exact amount I would be paying if the loan was modified but they told me the only way to get a modification was to be in default so the only way to get any relief was to be in default. Do not do this just walk away it wasn't worth all the hassle and hope that there really was some kind of real relief with any of these programs.

[Loneprotester]

12:12 PM on 02/09/2011

You said it all, friend. In the two years it took to get this FAKE MOD you could have moved out, rebuilt your credit, saved money, and been ready to--well, rent for now, but buy eventually.

This whole HAMP plan has been a massive delaying tactic on the part of the gov't-big bank cartel.

Walk away, people. WALK AWAY.

[cats530]

03:51 PM on 02/09/2011

I agree on the "do not do this" part, but not on the "just walk away". Educate yourself on your loan package and deed of trust. Is the originating lender still in business? Was it a table-funded loan? Securitized? MERS? How did your present servicer wind up with your loan? If you find evidence of fraud, you consult several attorneys who give you your options. If they think a suit is favorable to your side, take the money you were giving the pretender-lender in those never-ending and scamming "trial payments" and pay your attorney. This is called "trial payments for your own trial" and there will be an end to it one way or another. Most suits don't go to trial, but end up in settlement. You may negogiate a court-ordered settlement (principle reduction and other damages) and when the pretender-lender tries to reneg on the agreement (as most do with regular modifications), they can explain their capriciousness to the judge.

[Scott V Brown]

06:37 PM on 02/08/2011

The entire TARP program was a sham from the beginning to the brutal end of Obama's believability. All the money went thru HUD and was sent to local county officials who were told that it was designated to purchase foreclosed houses.
The foreclosed houses were owned by the banks, so it was another bail-out of the banks.
The homes were repaired by cronies of the county employees, and the county charged huge fees to oversee the repairs, so it was a bail-out of local government and a way to siphon money to local elected officials and had nothing to do with saving peoples homes, helping with the payments, or keeping people in their homes.
And, absolutely nothing to do with "rewriting" loans to make them affordable.
Obama and his gang need to go to an evening of "foreclosure counseling"at the local non-profits and see the lines going out the door and sit with families that just cry and tell horrible stories and then everyone cries including the counselors.
There is nothing to do but cry.
There is no help coming.
There is no help coming.
There is no help coming.
"There but for the grace of God, go I."
We are on our knees.
Can you hear us?

[johndomane]

04:49 PM on 02/08/2011

Loan Modification? What a joke!!! I filled out my loan modification form and sent ti in. 4 months later not a word and I get an auction notice stating my house will be sold at auction in 3 weeks. Not one call not one note NOTHING except GET OUT!!!!!
This debacle should have caused our Tunisian and Egyptian Moment.

[Chester Erickson]

01:59 AM on 02/09/2011

What mortgage company was it?

Also, did you get an eviction notice, or was it just a sale date notice?

Did you call and verify that they had received the modification paperwork? They lose paperwork a LOT.

I deal with homeowners every day who have been fighting through the modification process for ages. Some are successful, others are not, but the dual track approach (one branch works the mod, the other side works the foreclosure because technically you are in default) is pretty common and you can probably get them to postpone the sale if you are proactive.

[ResearchtheFacts]

03:39 PM on 02/08/2011

Welcome to the Obama age.

[madatnewsmedia]

11:51 AM on 02/09/2011

President Obama isn't the reason folks are losing their home.

[Cookie100]

01:22 PM on 02/09/2011

Well the very keast you could do IS Researchthefacts. What you said is absurd. When Dubya was in office he redistributed 80% of the wealth to 2% of the population, why weren't you complaining then? Perhaps it was because he didn't have a D after his name and the c olor of his s kin was a bit different.

[seal62]

03:17 PM on 02/08/2011

The banks make money stealing your house . Why would they do a loan mod when tax payer money pays them off the full amount ?

[james rimes]

01:11 PM on 02/08/2011

T.A.R.P
The purposes of this Act are--

(1) to immediately provide authority and facilities that the Secretary of the Treasury can use to restore liquidity and stability to the financial system of the United States; and

(2) to ensure that such authority and such facilities are used in a manner that--

(A) protects home values, college funds, retirement accounts, and life savings;

(B) preserves homeownership and promotes jobs and economic growth;

(C) maximizes overall returns to the taxpayers of the United States; and

(D) provides public accountability for the exercise of such authority.

[cats530]

03:55 PM on 02/09/2011

Yeah, what a L.I.E. T.A.R.P. was.

[Godfearing]

01:02 PM on 02/08/2011

How many homes and commercial buildings are underwater in their loan to value ratio? How many commercial retail and manufacturing buildings in small town America completely empty and worthless? Believe me, you and the U. S. Congress don't want to know!