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Servicers Seek a Relaxation of Loan-Mod Doc Guidelines
American Banker (08/04/09) P. 9; Berry, Kate
The Treasury Department is being pressured by mortgage servicers to ease some of the criteria for the White House's loan modification program. The Obama administration plan requires verification of "other" forms of income, such as alimony and child-support payments, along with a signed letter from an employer that specifies any tips or commissions received by the borrowers will likely continue for the duration of the modification. Servicers say the process of gathering such documentation and collecting signatures takes too much time and is becoming a major impediment.
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Banks Increase Purchase of Treasuries
Washington Times (08/04/09) McCormick, Liz Capo
U.S. lenders upped their purchases of Treasuries 15.6 percent over the past year, nearly double the average annual growth rate of about 8 percent, reports Greenwich, Conn.-based trading and research firm MKM Partners. Demand could rise even more as sales of the federal-agency debt of companies such as Fannie Mae and corporate bonds slow. Barclays expects sales of securities to hit a record $2.1 trillion this year, and rising purchases could keep borrowing costs -- the 10-year Treasury yield is a benchmark for mortgages -- in check.
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Congress Urged to Pass Rental Plan
Tampa Tribune (08/04/09) Behnken, Shannon
With foreclosure rates up and more owners losing their homes despite efforts to modify mortgages, Congress is being urged to pass the Right-to-Rent plan, which would compel lenders to lease foreclosed properties to homeowners for as long as a decade. While details are still sketchy, lenders could be allowed to unload the properties to professional landlords or private investors -- who would be required to honor the lease -- or retain the home and have a management firm orchestrate the rental contract. Critics are concerned that foreclosed homeowners would have trouble paying rent and that selling the homes to investors at low-ball prices would put even more downward pressure on property prices.
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Biggest Banks Come Up Short on List of Mortgage Modifications
Bloomberg (08/04/09) Kopecki, Dawn
A newly released Treasury Department study shows that the nation's largest banks have found it more difficult to meet demand for loan workouts than their smaller competitors. Four of the biggest players -- Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. -- are expected to show the poorest levels of homeowner aid among the 31 companies taking part in the White House's $75 billion modification program. The Obama administration is looking to create transparency about which companies are doing the most to help.
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PMIs Give GSE Mods a Second Look
National Mortgage News (08/03/09) Vol. 33, No. 43, P. 10; Collins, Brian
A new program developed by private mortgage insurers could increase workouts involving insured non-GSE loans. The net present value test often penalizes loans with mortgage insurance and makes a mathematical case for foreclosure, so the Mortgage Insurance Cos. of America will have carriers review loans that fail the NPV test to determine if they can provide an advance claim payment and allow a modification, says the group's executive vice president, Suzanne Hutchinson. Working with servicers, mortgage insurers were able to address such technical issues last year and keep nearly 100,000 people in their homes.
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