Current Housing Indicators |
| CURRENT | PREVIOUS | ||
| Existing Home Sales | 4.49m | ▼ | 4.74m |
| New Home Sales | 309,000 | ▼ | 344,000 |
| Housing Starts | 583,000 | ▲ | 477,000 |
| Building Permits | 547,000 | ▲ | 531,000 |
| HMI | 9 | UNCH | 9 |
| Existing Home Prices | $170,300 | ▼ (annually) | $199,800 |
| New Home Prices | $201,100 | ▼ (annually) | $232,400 |
More Videos
#DIANAOLICK ON TWITTER
- Under Pressure, FHA Skews to Wealthier Home Buyers
- Huge Spike in Home Prices Is Not Real
- Investor Caution: Beware of Heat in Distressed Housing
- Foreclosures Move East as Hardest-Hit Markets Clear
- Foreclosures Fall...And That's a Bad Thing?
- After a Dip, Homebuilder Sentiment Surges Again
- Obama’s ‘Responsible’ Reno Homeowners: Are They?
- Mortgage Market Still Hampers Housing Recovery
- Bank of America Offers Principal Reductions to 200,000 Homeowners
- Short Sales: Necessary Compromise or Scamming the System?
- A New Look at the ‘New Poor’
- Six Pack: Beer Buzz of the Week
- Greek Exit Could Trigger 50% Fall in Euro Stocks: Analyst
- Under Pressure, FHA Skews to Wealthier Home Buyers
- Big Stock Upside for Hudson City Deal: Analyst
- 5 High-Yield Stocks Ready to Boost Dividends
- Yoshikami: Four Things You Need to Know About Gold Now
- Steinbock: The Euro Zone Endgame Begins
- Option Bulls Take Another Shot on Idenix
- How Nasdaq Lost Control of Facebook IPO, by the Minute
- Week Ahead: Europe Has Wall Street Bull on Short Leash
- Pro-Bailout Greeks Regain Lead in Polls Before Vote
- Citigroup Lost $20 Million on Facebook IPO Trades
- JPMorgan to Shake Up Risk Team After Big Loss: Report
- RIM May Cut at Least 2,000 Jobs in Restructuring: Report
- EU Finalizes Bank Reforms; Shifts Burden to Bondholders
- Spain's Bankia Eyes Stake Sales After Record Bailout
- EU Set to Launch Action Against China Over Telecom Aid
RSS FEED
Realty Check
Text Size 
Are Investors Holding Up Loan Modifications?
On the heels of a new report that foreclosures are not in fact abating, as some banking on moratoria and modifications might have expected, I sat down this morning for an interview with Barbara Desoer, president of Mortgage, Home Equity & Insurance Services at Bank of America [BAC
Loading...
()
]. B of A is participating in the Obama administration’s Homeowner Affordability and Stability Plan, specifically in the Home Affordable Modification Program.
“As an investor as well as a servicer for our own portfolio, we have a model and we have assumptions that say we are better off as an investor by doing a modification that makes a payment affordable than taking the house to foreclosure,” began Desoer. “If the model says taking the house to foreclosure is the better option, that is the path that we will go.”
It all seems pretty simple over at B of A, the largest loan servicer in the country, with nearly 14 million customers and $2 trillion in mortgages. But it’s only simple for the loans B of A holds on its own books. As we’ve discussed before, the big problem is with the stubborn investors, who have contracts saying the loans cannot, in some cases, be modified. Desoer says they’ve been on the phone with investors, and “some of those conversations have been more successful than others.”
Yesterday, J.P. Morgan [JPM
Loading...
()
] CEO Jamie Dimon took investors head on over loan modifications: “I know we’re going to get a lot of complaints from investors in these pools that, maybe, that are going to get hurt modestly by it. Well, they should get over it, okay?”
But the investors don’t have to get over it, not if they think they can make more money taking the home to foreclosure. The question is, why would the math that, say, Bank of America does on a loan, figuring out that the loan would be worth more modified, not jibe with the investor math on the same loan?
“We believe that with the fact base put in front of them and a way for it to be a win win win between the borrower, the servicer and the investor, this cash flow that would have resulted had the home been taken to foreclosure and offering an option to the borrower that gives the investors a better alternative than that, that we will be able to convince some of the investors that this is in their best interests,” argued Desoer.
I guess we’ll have to see if she’s right.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes
