Permanent Modifications Showing Slight Improvement

Feb 8, 2010

According to a report from Barclays Capital, modification rates picked up over December and January as servicers converted more trials into permanent modifications under the Home Affordable Modification Program (HAMP). According to the latest HAMP progress report from the Treasury, servicers provided more than 66,000 permanent modifications through December. Participating servicers receive more than $35 billion in total capped incentives, but the program could reach as high as $50 billion. Modification rates turned a corner in October 2009, according to BarCap analysts, congruent with the rise in HAMP permanent conversion rates.

The Treasury recently changed document guidelines for the servicers that go into effect June 1, 2010. After that date, borrowers seeking help through the program must provide certain documentation to enter into a trial modification. At the start of the program, servicers collected the documents during the three-month trial plan, creating a lag time in the permanent conversion rate. Out of the more than 1 million borrowers in HAMP trials, 34% have been on private-label securitized loans meaning the loans are not held by Fannie Mae, Freddie Mac or Ginnie Mae. After assuming a similar conversion rate for non-agency loans, analysts found 22,600 non-agency permanent modifications under HAMP.

This ties in closely with the 25,000 loans modified in past two months that we see using our custom logic on Loan Performance. A higher number based on our logic also makes sense to us as some servicers have non-HAMP modification programs, according to the report. - FTC says no more upfront loan modification feesThe Federal Trade Commission has proposed a new rule that would prohibit third parties, including loan modification specialists and loss mitigation attorneys, from collecting payment for foreclosure prevention services until after they obtain a documented offer from a lender or servicer for a modification or other form of mortgage relief. Homeowners facing foreclosure or struggling to make mortgage payments shouldnt have to contend with fraudulent companies that dont provide what they promise, FTC Chairman Jon Leibowitz said.

The proposed rule would outlaw up-front fees so companies cant take the money and run. The FTC has brought 28 cases against companies suspected of foreclosure rescue and mortgage modification scams, and state and federal law enforcement partners have brought hundreds more. According to the agency, generally these cases charged that companies do not provide the services they promise and that they misrepresent their affiliation with the government and government housing assistance programs, including the Making Home Affordable program.

Far too many homeowners have paid up-front fees to bad actors who promised loan modifications but never delivered, Treasury Secretary Timothy Geithner said. I commend the FTC for proposing a strong set of safeguards to protect consumers from these predatory practices. The proposed rule also would bar providers from telling consumers to stop communicating with their lenders or mortgage servicers.

It would also require them to disclose to consumers that they are for-profit businesses, the total amount consumers will have to pay, that neither the government nor the lender has approved their services, and that there is no guarantee that the lender will agree to change their loan.Geithner says no double dipU.S. Treasury Secretary Timothy Geithner said yesterday that the risk the U.S. economy will slip back into recession is lower now than at any time in the past year, but that recovery will be slow and uneven.

Even though credit ratings agency Moody's last week warned that anemic U.S. growth, on top of already stretched government finances, could put pressure on the country triple-A status, Geithner dismissed concerns that rising U.S. indebtedness might put pressure on the United States' prized triple-A credit rating. "Absolutely not," Geithner said when the interviewer suggested rising debt levels could put pressure on the top-notch rating. "That will never happen to this country." Former Treasury Secretary Hank Paulson, however, says that reducing the federal budget deficit poses "the most serious long-term challenge" to the United States. He also says he realized as Treasury secretary it was tough to convince lawmakers to tackle controversial issues without a crisis. Gei thner claimed there were even some encouraging signs in Friday's report on U.S. unemployment for January, which showed another 20,000 jobs lost but a dip in the unemployment rate to 9.7 percent from 10 percent in December. He said the Obama administration is doing everything it can to enhance recovery prospects and played down chances that growth might stall and push the United States back into recession.

The EU debt crisis and us"Sovereign debt panic" finally struck last week, causing severe one-day drops in stock markets from New York to London to Toronto on Thursday. The epicentre of the crisis is Greece, in danger of defaulting on its debt payments to worldwide holders of its government bonds, or sovereign debt. The world is awash in potentially unsustainable debt, and the U.S. looms largest. President Barack Obama just tabled a budget that projects a doubling in America's national debt, to $28 trillion (U.S.), by decade's end. That's twice the size of the U.S. economy. Yet it's the EU who is threatening the wealth of all of us. If Greece defaults on its debts, and it's followed by Spain and Portugal and possibly Ireland and Italy as well, then the collapse of Lehman Brothers in 2008 will seem like a mere blip. It isn't so much the risk of default by these countries themselves that is spooking the markets at the moment, but the possibility that a still-skittish financial system will succumb to another fear-driven contagion.

Normally Greece would simply devalue the drachma, or allow the markets to do it for them, and that adjustment would rebalance the economy and eventually make it more competitive, while also raising the value of foreign liabilities and making the people poorer. But that can't happen, because Greece is part of the monetary union, and the euro is held up by Germany's strength. There's talk of Greece leaving the euro, or being kicked out, but that would just make matters worse: outside the euro Greece would go into a downward spiral, dramatically increasing the value of its euro-denominated debts and creating hyper-inflation.

While it's hard to imagine any of these countries' governments defaulting on their debts, restoring their budget balances is going to hold back their economic growth for a long time and lead to higher long-term government interest rates around the world.Now on to our real estate investing educational section...It is estimated over 95% of millionaires made their money from real estate. On the other hand, the average Realtor earns less than $40,000 annually. Why the discrepancy? Obviously it's quite possible to make stellar returns from real estate yet each and every year plenty of people barely make ends meet even while working at it full-time.

Yet research shows that success in real estate doesn't require full-time work, a large private income or many of the other trappings of success typically associated with wealth creation from other venues. In fact, plenty of part-time investors far outperform fulltime real estate associates each and every year. Learn the secret of their success with these quick tips:

1. Accept Success - Seriously! Have you ever stopped to contemplate how easily most people accept failure or fate versus those that take responsibility for their own success? It's quite remarkable when you stop to think about it. Understand that everyone is capable of making a success from short sale investments - but few people actually do so not because they are helpless but because they wait for help rather than forging their own path. When in doubt about what to do, first find a mentor and then...simple do it. IF it's wrong you will learn from the experience but if not, you have made progress either way.

2. Work at home when possible. Set a schedule then stick to it. Don't allow distractions to clutter up your productive short sale investing time. Hire childcare if needed, find a reputable and reliable virtual assistant and then focus time and energy on building the foundation for your short sale empire by automating as much as possible.

3. Dump dumb rules. Simply your life and investing goals as much as possible. Sit down and think about how much time it takes you to argue with your spouse about some minor situation versus finalizing a deal or making offers on upcoming short sales. Re-evaluate what rules and roles dominate your day then eliminate those that don't enhance your life.

4. Learn to say NO. Stop apologizing and don't try to do it all yourself. It's not in your best interest (or that of your family and friends) to tackle more than you are able to deal with on a regular basis.

Leave space for down-time as well as imprompt u activities. Short sale investments are especially prone to last minute maneuvers where those that win aren't necessarily the most prepared but simply those in the right place at the right time.

5. List- Buy. The more you list the more they buy and vice versa...the more you buy the more you have to list as a short sale investor. It's a numbers game so take action and automated it as soon as possible. Increase your target marketing efforts on a regular basis; once you reach the desired number of homes, begin to switch your strategy to include more affluent clients.

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