By: William Matz

William Matz — Mon, 23 Nov 2009 02:27:21 +0000

Many good comments. A couple of additional points:
1. It appears mod statistics are being horribly misrepresented. Not only have a low % of the eligible “gotten” mods, but it turns out that a very low % of the “trial mods” are becoming permanent. The majority are apparently headed for foreclosure or limbo-land, until the lender can afford to take the loss.
2. Pooling and servicing agreements for securitized loans provide servicers with a strong financial motivation to find any excuse NOT to modify, leading to many denials of borrowers who should have received them.
3. None of the projections seem to consider the negatively compounding effects of additional foreclosures. I.e. more foreclosures lead to lower home prices, which lead to more foreclosures, which lead… Foreclosures also lead to more un/underemployment, which also leads to more foreclosures. So the final count could be much higher unless we stop this quickly.
4. The only quick (but partial) remedy is to pass the Chapter 13 cramdown legislation.
5. As a lawyer who also has many years inside the mortgage system, it is clear to me that Judge Montgomery has little understanding of the mortgage system. Compare the D.C. Circuit case and the many bankruptcy and state court cases that are increasingly finding for the borrowers.
6. On the bright side, unless rents start plummeting, they may put a floor under real etate prices, as we can now buy homes that cash flow immediately, which is creating a hot market at the lower end (in CA).

Comments on: Delinquent Mortgages Equal to Three Times A Balanced For-Sale Inventory

By: William Matz