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Loan Modification

: Mortgage Lender Implode-o-Meter

Another wave of foreclosures is poised to strike

By Implode-Explode Heavy Industries

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... just recently, said the 37-year real estate veteran, there's been a surge of requests for so-called broker price opinions, or appraisals that lenders often ask brokers to provide just before they put a foreclosed property on the market.

"I think it's going to be a very big wave," he said. "Just like what we saw through 2008."

...

The Obama administration is racing to avert as many foreclosures as possible. So far, more than 240,000 distressed borrowers have been approved on a trial basis under the Home Affordable Modification Program, in which their loans are being reworked so monthly payments are targeted at 31% of their gross income, said Seth Wheeler, a senior advisor to Treasury Secretary Timothy F. Geithner.

One wonders if the new "125% loan" proposed last week at Fannie was the Obama administration's grand plan to finally "avert foreclosure" for those 240k people parked in the "rescue program" -- who are facing foreclosure largely because of prior lax lending standards. So clearly, new lax lending standards are needed to save them! Hey, hair of the dog, and all!

Would principal cram-downs really be so bad? After all, all the banks are on government life-support. Is it so important to keep the banks from having paper losses that we must saddle distressed borrowers with 125% mortgages, more than two years after the start of the crisis?

Full post as published by Mortgage Lender Implode-o-Meter on July 05, 2009 (boomark / email).