Loan Mods Slow and Unproductive

Just a quick post today, I am off to Real Estate Connect in San Francisco a tech based real estate conference at the Palace Hotel. I will update any interesting items from the conference over at Twitter. To follow go to: http://twitter.com/johnoldham .

So on to the post . . .

So how is the Government’s loan modification program going?

In a nutshell slow and not very productive. The banks have been servicing very few of the eligible clients that could benefit from a change and according to government data released Wednesday, only 9 percent of an eligible 2.7 million borrowers had seen their mortgages modified under the new program as of the end of July.

The pace of loan modifications varies widely among lenders and servicers. The best results among large loan servicers came from Saxon Mortgage Servicers Inc. One in four of Saxon's 84,000 eligible borrowers has received a trial loan modification with a lower monthly payment. Aurora Loan Services, GMAC Mortgage and JPMorgan Chase all had one in five qualified borrowers in a trial loan.

Bank of America Corp and Wells Fargo & Co. — which have received billions in federal bailout money — were below average. BofA has modified just 4 percent of eligible loans under the program. Wells Fargo has modified 6 percent of eligible loans. Wachovia Corp., which was taken over by Wells Fargo last December, has modified just 2 percent. American Home Mortgage Servicing, with 153,000 eligible borrowers, was among the servicers that has not yet reported a single loan modification.

This could have a big impact on the Alameda Shadow inventory, those that are being threatened with foreclosure may not have the time need to modify their loans to save their homes. It seems that banks just do not know what to do, and in some case would rather have the property go into foreclosure than modify.

MSNBC had a great report on the lack of loan modifications.

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