Reviews of the Home Affordable Modification Program ("HAMP") tend to agree on a skeptical tone, but they diverge in terms of their analysis. The split often reflects the orientation of the critic. Those that are looking at the problem from up on high tend to attach their a priori conceptions of the concept of modification - either from the perspective that its best to "take no quarter" in terms of forgiveness or from the belief that it is does
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It is the lack of supervision over servicers makes it possible for a property to be foreclosed upon but never sold.
The home in Durham which was pictured in this entry is among that group. A Colorado company called Specialized Loan Servicing currently has the contract to service this home. Standard & Poor's says that of
- The Mortgage Bankers Association believes that before the foreclosure crisis is over, banks will foreclose on one of every two hundred homes in the United States.
- Every month, more than 80,000 new families see their homes enter into foreclosure.
- One child in every classroom in the United States is at risk of losing his or her home because their parents are unable to pay their mortgage.
In the wake of the unprecedented back of foreclosures, housing values are often now determined through a process known as the broker's price opinion ("BPO").
BPOs are popular in the foreclosure process because they are cheaper than an appraisal. A regular appraisal might cost $500.
A BPO costs only a fraction of that amount and it can be done quickly. Those factors explain both its popularity and its pitfalls. The
It isn't just that people think that the document problem might become a problem. At this point, it is hard to find anyone with a professional role in the housing sector that doesn't imagine that this will upend the sale of homes. It is a question of when, and not "if," according to many experts. This morning, Karl Case (of Case-Shiller) reversed his earlier expectations for a near-term recovery and declared that he sees more gloom and doom for more than a year. Mark Zandi says it could several years. Realtors are bemoaning how they have deals that are suddenly in flux. We're not at the point where we can say "if it wasn't for distressed sales, then we'd have no sales at all," but it is true that distressed sales make up almost half of all transactions and that their share of home sales now accounts for almost six times more volume than historical norms.
Saying that it Isn't So
It is like Gertude told Hamlet: "The lady doth protest too much, methinks."
An under-the-radar bill passed out of Congress this week that could give servicers a chance to escape from liability for the mortgage affadavit crisis.
The bill sidesteps the authority of state judiciaries to impose standards for the notarization of documents. That would upend the recent actions of state attorneys general to make servicers produce adequate documentation before they can go forward with foreclosure proceedings. It is a legitimate requirement, because recent reports show that administrators at GMAC and JP Morgan Chase, among others, were signing documents without without verifying their authenticity.
In 23 states, foreclosure proceedings have been disrupted because of news that many servicers were not using proper procedure for documenting their affadavits. Those states are ones that insist upon judicial review in the foreclosure process.
Those requirements would be undermined by this bill. It sets up the possibility of a case where a
The affidavit armageddon continues to spread. Today the Office of the Comptroller of the Currency notified seven servicers that it would be visiting their offices in order to verify that their foreclosure procedures were legitimate. This follows voluntary annoucements by GMAC, JP Morgan Chase, and Bank of America that they were going to suspend current foreclosures in process while they review documents.
The banks are getting plenty of heat. Imagine how bad this probelm is going to be, and imagine how long