The numbers announced last week by the administration show that some progress is being made on mortgage loan modifications. Approximately 66,000 final modifications nationwide were completed in 2009 under the Obama Making Homes Affordable Plan. That is a very small number since the number of eligible homeowners is somewhere in the millions. However, only 33,000 had been completed through the end of November, so the lenders completed an additional 33,000 in the month of December alone. This tends to show that lenders might finally have the infrastructure and processes in place to get modifications done.
There is also the thought that the servicing companies doing the modifications don't really care if they get them done or not. In fact, servicing companies can often make more off fees to foreclose than just servicing a loan or getting it current. The holder of the note/investor may not even be the one making the decision that can have drastic impacts on them. It seems that banks have already taken the accounting hits for dropping homes to fair value, so they don't have a problem letting them go to auction or selling at a short sale for current market price.
In any event, we will soon see how much can get done in 2010.
Chris Barsness, Esq. MBA