US Mortgage Applications Down
www.rmfundinggroup.com
The total number of mortgage applications filed in the U.S. last week slipped 2.4% as interest rates generally crept higher, the Mortgage Bankers Association said Wednesday.
The refinance index declined 3.4% for the week ended Jan. 25 from the previous week, according to MBA's weekly survey, which covers more than three-quarters of all U.S. residential-mortgage applications. On a seasonally adjusted basis, the purchasing index slid 1.8% from the prior week, MBA said.
Record-low interest rates have attracted new buyers and persuaded many homeowners to refinance their existing mortgages. However, tightened credit restrictions still bar many borrowers from filing loan applications.
The share of applications filed to refinance an existing mortgage totaled 79%, down from the previous week's 82%. Adjustable-rate mortgages, or ARMS, made up 3.6% of total activity.
Call for a quote 619 884 9116 - 888 308 7775
Wednesday, January 30, 2013
Friday, April 23, 2010
HOW DO YOU SEE THE REAL ESTATE MARKETS?
888 308 7775 WWW.RMLOANMODS.COM OR WWW.RMFUNDINGGROUP.COM
Peter Schiff has been sounding the warning for some time on the inevitable bubble that the U.S. government is becoming, and once that bubble bursts, according to Schiff, there's nowhere else to go but to experience what he calls a "financial hangover."
The most recent bubbles related to the tech industry, which when it burst led to the Federal Reserve creating the pain of the housing bubble, which we're still in the midst of, and now Schiff says once the government bubble bursts, it will be devastating to our economy, and the consequences will be extremely painful for the majority of Americans.
Who knows how far it will reach beyond America as well, as the housing crisis shows, as many institutional investors, including countries, had invested deeply into securities backed by the mortgages which collapsed.
What will happen in the bond market is anyone's guess, but whatever happens, it's not going to be good, at least as far as the Treasury market goes.
Schiff and others who understand what's going on have been strongly arguing and urging the government to remove itself from the private market and quit their socialist agenda.
The history of socialism has proven it doesn't work, and to continue on that path will lead to disaster; it's only a matter of when, not if.
As Schiff also points out, the idea that the financial and economic crisis of 2008 was caused by too much capitalism, is a joke and at best based on ignorance, and at worst, an excuse for government officials to attempt to manage even more of the private sector, which effectively takes the decisions largely out of the hands of entrepreneurs and transfers it to the clueless politicians, who know nothing of what it takes for business and economic success.
With the government increasingly interfering in what should be private sectors like healthcare, housing, cars, banking and insurance, the result will ultimately be a decreasing private sector which will be counted on to support the giant government squid whose tentacles have extended into everything.
The problem is, there won't be enough money to do that, as increased bailouts, higher taxes and falling productivity will eventually cause the whole thing to crash.
Maybe the government, and more importantly, Americans and others in the world, will learn at that time there is a great need to limit the size of government and keep it constrained to its purpose, and leave the free market to those who know how to work in it the best.
Peter Schiff has been sounding the warning for some time on the inevitable bubble that the U.S. government is becoming, and once that bubble bursts, according to Schiff, there's nowhere else to go but to experience what he calls a "financial hangover."
The most recent bubbles related to the tech industry, which when it burst led to the Federal Reserve creating the pain of the housing bubble, which we're still in the midst of, and now Schiff says once the government bubble bursts, it will be devastating to our economy, and the consequences will be extremely painful for the majority of Americans.
Who knows how far it will reach beyond America as well, as the housing crisis shows, as many institutional investors, including countries, had invested deeply into securities backed by the mortgages which collapsed.
What will happen in the bond market is anyone's guess, but whatever happens, it's not going to be good, at least as far as the Treasury market goes.
Schiff and others who understand what's going on have been strongly arguing and urging the government to remove itself from the private market and quit their socialist agenda.
The history of socialism has proven it doesn't work, and to continue on that path will lead to disaster; it's only a matter of when, not if.
As Schiff also points out, the idea that the financial and economic crisis of 2008 was caused by too much capitalism, is a joke and at best based on ignorance, and at worst, an excuse for government officials to attempt to manage even more of the private sector, which effectively takes the decisions largely out of the hands of entrepreneurs and transfers it to the clueless politicians, who know nothing of what it takes for business and economic success.
With the government increasingly interfering in what should be private sectors like healthcare, housing, cars, banking and insurance, the result will ultimately be a decreasing private sector which will be counted on to support the giant government squid whose tentacles have extended into everything.
The problem is, there won't be enough money to do that, as increased bailouts, higher taxes and falling productivity will eventually cause the whole thing to crash.
Maybe the government, and more importantly, Americans and others in the world, will learn at that time there is a great need to limit the size of government and keep it constrained to its purpose, and leave the free market to those who know how to work in it the best.
Sunday, April 11, 2010
More Inflation On The Way! That Means Higher Rates!
WWW.RMFUNDINGGROUP.COM 888 308 7775 WWW.RMLOANMODS.COM
If China allows its renminbi yuan to significantly appreciate against the U.S. dollar, the Australian dollar and the New Zealand dollar would likely be the biggest losers among Group of 10 developed countries’ currencies, and Japan’s yen the biggest winner, according to Barclays Capital foreign exchange analysts.
“Our game theory analysis suggests that China would be better served offering the U.S. something in terms of CNY [Chinese yuan] appreciation, instead of maintaining the CNY-USD [Chinese yuan-U.S. dollar] peg,” David Woo and Piero Ghezzi said in a report Thursday.
Although no one knows the exact timing of the move or the details of any new exchange regime, the New York Times reported Thursday that the Chinese government is preparing to announce in the coming days that it will allow its currency to strengthen slightly, and vary more from day to day.
So far Friday, there were no signs of that happening – the Chinese central bank reportedly fixed the yuan’s official rate at 6.8260 per dollar, slightly lower than 6.8259 Thursday. The yuan is now allowed to trade in a band of 0.5% on either side of the official rate.
“If and when China revalues their currency, they will most likely opt for a one time appreciation of 2 to 4% along with a wider trading band,” Kathy Lien, director of research at GFT, said in a note to clients Thursday.
“Considering that some people still estimate the yuan to be undervalued by as much as 40%, this is a small concession for China who has been reaping the benefits of an artificially weak currency for decades,” she said, adding that such a revaluation “would be negative for the U.S. dollar and positive for the Japanese yen.”
If China allows its renminbi yuan to significantly appreciate against the U.S. dollar, the Australian dollar and the New Zealand dollar would likely be the biggest losers among Group of 10 developed countries’ currencies, and Japan’s yen the biggest winner, according to Barclays Capital foreign exchange analysts.
“Our game theory analysis suggests that China would be better served offering the U.S. something in terms of CNY [Chinese yuan] appreciation, instead of maintaining the CNY-USD [Chinese yuan-U.S. dollar] peg,” David Woo and Piero Ghezzi said in a report Thursday.
Although no one knows the exact timing of the move or the details of any new exchange regime, the New York Times reported Thursday that the Chinese government is preparing to announce in the coming days that it will allow its currency to strengthen slightly, and vary more from day to day.
So far Friday, there were no signs of that happening – the Chinese central bank reportedly fixed the yuan’s official rate at 6.8260 per dollar, slightly lower than 6.8259 Thursday. The yuan is now allowed to trade in a band of 0.5% on either side of the official rate.
“If and when China revalues their currency, they will most likely opt for a one time appreciation of 2 to 4% along with a wider trading band,” Kathy Lien, director of research at GFT, said in a note to clients Thursday.
“Considering that some people still estimate the yuan to be undervalued by as much as 40%, this is a small concession for China who has been reaping the benefits of an artificially weak currency for decades,” she said, adding that such a revaluation “would be negative for the U.S. dollar and positive for the Japanese yen.”
Friday, April 9, 2010
How Does Inflation Affect Interest Rates and How They Affect Me
WWW.RMFUNDINGGROUP.COM 888 308 7775 WWW.RMLOANMODS.COM
Inflation is what makes your money of today worth less tomorrow. Borrowers find borrowing money more attractive but it’s less attractive for lenders. This is why lenders raise their interest rates because they know that the dollars people pay next month are worth less than the money they loan today.
This turns into a vicious cycle. When prices rise, people and businesses tend to borrow more so that they can afford all the things the want to buy, whether it be cars, holidays or home improvements. This is turn causes interest rates to rise even more due to increased demand in borrowing money.
Inflation is primarily caused by governments. It may be because of borrowing themselves, printing more currency, deficit spending or giving out more credit. There isn’t much that you can do as an individual to change this.
However if you are wanting to borrow money, there is plenty you can do when trying to understand what is happening. Governments can’t keep increasing inflation as it would get to the point where there would be large demands for something to be done. When something does have to be done, this normally involves closing down the spigot or just slowing down the actions detailed above.
These actions affect how you borrow money, just like inflation. Deflation lowers rates which makes borrowing more attractive. However this causes the dollars to be worth less than they are tomorrow. Basically this means that your money is worth more tomorrow if you save and invest, than they are today.
If you are looking to borrow it’s a case of making a calculated guess as to whether inflation or deflation is going to occur. It sounds rather complicated but there are ways for the laymen to understand.
There’s no exact method set in stone but there are indicators to look out for and anyone can do this. In times gone by people used to look at the gold and silver markets, however the dollar isn’t linked to hard commodities anymore.
Because oil is such an important commodity which is linked to the production of so many products, increased oil prices means that inflation is more likely. If you notice that oil prices are set to increase or decrease in the future, you’ll have an idea of inflation.
Bond option prices are also a good signal. Professional money managers bet on whether interest rates will change considerably over the next year or two. This can be a slightly more tricky relationship to understand so it would be a good idea to ask a specialist.
Remember, the dollar today measures the costs of services and goods you buy today. But when you borrow money, those dollars are being spent today but paid back in the future. The value of the dollar when you pay back your loan reflects the true cost.
Inflation is what makes your money of today worth less tomorrow. Borrowers find borrowing money more attractive but it’s less attractive for lenders. This is why lenders raise their interest rates because they know that the dollars people pay next month are worth less than the money they loan today.
This turns into a vicious cycle. When prices rise, people and businesses tend to borrow more so that they can afford all the things the want to buy, whether it be cars, holidays or home improvements. This is turn causes interest rates to rise even more due to increased demand in borrowing money.
Inflation is primarily caused by governments. It may be because of borrowing themselves, printing more currency, deficit spending or giving out more credit. There isn’t much that you can do as an individual to change this.
However if you are wanting to borrow money, there is plenty you can do when trying to understand what is happening. Governments can’t keep increasing inflation as it would get to the point where there would be large demands for something to be done. When something does have to be done, this normally involves closing down the spigot or just slowing down the actions detailed above.
These actions affect how you borrow money, just like inflation. Deflation lowers rates which makes borrowing more attractive. However this causes the dollars to be worth less than they are tomorrow. Basically this means that your money is worth more tomorrow if you save and invest, than they are today.
If you are looking to borrow it’s a case of making a calculated guess as to whether inflation or deflation is going to occur. It sounds rather complicated but there are ways for the laymen to understand.
There’s no exact method set in stone but there are indicators to look out for and anyone can do this. In times gone by people used to look at the gold and silver markets, however the dollar isn’t linked to hard commodities anymore.
Because oil is such an important commodity which is linked to the production of so many products, increased oil prices means that inflation is more likely. If you notice that oil prices are set to increase or decrease in the future, you’ll have an idea of inflation.
Bond option prices are also a good signal. Professional money managers bet on whether interest rates will change considerably over the next year or two. This can be a slightly more tricky relationship to understand so it would be a good idea to ask a specialist.
Remember, the dollar today measures the costs of services and goods you buy today. But when you borrow money, those dollars are being spent today but paid back in the future. The value of the dollar when you pay back your loan reflects the true cost.
Friday, March 26, 2010
Obama's New Loan Modification Plan
www.rmloanmods.com or www.rmfundinggroup.com 888 308 7775
After months of criticism that it hasn't done enough to prevent foreclosures, the Obama administration announced on Friday a plan to reduce the amount some troubled borrowers owe on their home loans.
The multifaceted effort will allow people who owe more on their mortgages than their properties are worth to get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.
That would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program. It could spark criticism that the government is shouldering too much risk by taking on bad loans made during the housing boom.
The plan would also enable the borrowers' existing mortgage companies to receive incentives to lower their principal balances.
To be eligible for the FHA refinancing program, borrowers who owe more than the value of their homes, known as being "under water," must not have fallen behind on their existing mortgage payments.
Separately, the program also would reduce monthly payments for unemployed homeowners for up to six months.
The administration cautioned that the plan isn't intended to stop all foreclosures or assist all troubled homeowners.
"There's no intention here of tackling what may be 10 to 12 million foreclosures over the course of the next three years," said Diana Farrell, a White House economic adviser.
Instead, officials said, the goal is to make it more likely the administration will meet its original target, announced last year, of assisting 3 million to 4 million struggling homeowners.
That would be "enough to provide help to those for whom help is worthwhile ... and to provide some kind of stability in the market."
The plan won't assist investors and speculators or "Americans living in million dollar homes or defaulters on vacation homes," an administration fact sheet said.
Some homeowners will not be able to afford to stay in their homes because they bought more than they could afford, officials said.
Mark Zandi, chief economist at Moody's Analytics, estimated the plan could help an additional 1 million and 1.5 million homeowners avoid foreclosure. That compares with about 4.5 million already in foreclosure proceedings or 90 days delinquent on their mortgages, he said.
But preventing even a fraction of potential foreclosures could help stem the slide in home prices. That would encourage those who are under water to keep paying their mortgages as prices stabilize.
"The changes are wide-ranging and significant and have the real potential for bringing the foreclosure crisis to a much quicker end," Zandi said.
It is the latest effort by the Obama administration to tackle the foreclosure crisis which has continued to grow. Home foreclosures have soared despite the administration's effort to prevent foreclosures, a complex and problem-plagued endeavor involving more than 100 mortgage companies. Only 170,000 homeowners have completed that process out of 1.1 million who began it over the past year.
"We remain dubious about government mortgage modification efforts," wrote Jaret Seiberg, an analyst with Concept Capital's Washington Research Group. "So far none have lived up to expectations and we see little reason to believe the latest effort will turn out any different."
The plan announced Friday will also require the mortgage companies participating in the administration's existing foreclosure prevention program to consider slashing the amount borrowers owe. They will get incentive payments if they do so.
It also includes three to six months of temporary aid for borrowers who have lost their jobs. And there will be additional payments designed to give banks an incentive to reduce payments or eliminate second mortgages such as home equity loans -- a problem that has blocked many loan modifications.
The plan will also allow lenders to refinance mortgages that are under water with a new loan backed by the FHA. Lenders will have to reduce the first mortgage by at least 10 percent. And the combined total of second mortgages and other liens cannot be more than 115 percent of the current value of the home.
The four big holders of second mortgages -- Citigroup Inc., Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. -- have now joined the government's program to modify second mortgages, after pressure from the Treasury Department. That program was delayed for months but now the major players in the industry are on board.
After months of criticism that it hasn't done enough to prevent foreclosures, the Obama administration announced on Friday a plan to reduce the amount some troubled borrowers owe on their home loans.
The multifaceted effort will allow people who owe more on their mortgages than their properties are worth to get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.
That would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program. It could spark criticism that the government is shouldering too much risk by taking on bad loans made during the housing boom.
The plan would also enable the borrowers' existing mortgage companies to receive incentives to lower their principal balances.
To be eligible for the FHA refinancing program, borrowers who owe more than the value of their homes, known as being "under water," must not have fallen behind on their existing mortgage payments.
Separately, the program also would reduce monthly payments for unemployed homeowners for up to six months.
The administration cautioned that the plan isn't intended to stop all foreclosures or assist all troubled homeowners.
"There's no intention here of tackling what may be 10 to 12 million foreclosures over the course of the next three years," said Diana Farrell, a White House economic adviser.
Instead, officials said, the goal is to make it more likely the administration will meet its original target, announced last year, of assisting 3 million to 4 million struggling homeowners.
That would be "enough to provide help to those for whom help is worthwhile ... and to provide some kind of stability in the market."
The plan won't assist investors and speculators or "Americans living in million dollar homes or defaulters on vacation homes," an administration fact sheet said.
Some homeowners will not be able to afford to stay in their homes because they bought more than they could afford, officials said.
Mark Zandi, chief economist at Moody's Analytics, estimated the plan could help an additional 1 million and 1.5 million homeowners avoid foreclosure. That compares with about 4.5 million already in foreclosure proceedings or 90 days delinquent on their mortgages, he said.
But preventing even a fraction of potential foreclosures could help stem the slide in home prices. That would encourage those who are under water to keep paying their mortgages as prices stabilize.
"The changes are wide-ranging and significant and have the real potential for bringing the foreclosure crisis to a much quicker end," Zandi said.
It is the latest effort by the Obama administration to tackle the foreclosure crisis which has continued to grow. Home foreclosures have soared despite the administration's effort to prevent foreclosures, a complex and problem-plagued endeavor involving more than 100 mortgage companies. Only 170,000 homeowners have completed that process out of 1.1 million who began it over the past year.
"We remain dubious about government mortgage modification efforts," wrote Jaret Seiberg, an analyst with Concept Capital's Washington Research Group. "So far none have lived up to expectations and we see little reason to believe the latest effort will turn out any different."
The plan announced Friday will also require the mortgage companies participating in the administration's existing foreclosure prevention program to consider slashing the amount borrowers owe. They will get incentive payments if they do so.
It also includes three to six months of temporary aid for borrowers who have lost their jobs. And there will be additional payments designed to give banks an incentive to reduce payments or eliminate second mortgages such as home equity loans -- a problem that has blocked many loan modifications.
The plan will also allow lenders to refinance mortgages that are under water with a new loan backed by the FHA. Lenders will have to reduce the first mortgage by at least 10 percent. And the combined total of second mortgages and other liens cannot be more than 115 percent of the current value of the home.
The four big holders of second mortgages -- Citigroup Inc., Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. -- have now joined the government's program to modify second mortgages, after pressure from the Treasury Department. That program was delayed for months but now the major players in the industry are on board.
Wednesday, March 24, 2010
Commercial Real Estate to Bottom Out In 2010
WWW.RMFUNDDINGGROUP.COM / 888 308 7775
The real estate market as a whole has started to show signs of stabilization, accompanied by a recovering job market and loosened grip on consumer spending. According to Deloitte’s “Perspectives on Real Estate: Uncovering Opportunity in a Distressed Market” report, investors in standby mode are awaiting the opportunity to jump in on what used to be a highly profitable asset class – with action contingent on improving unemployment and GDP numbers.
Potential Barriers to Recovery
The Deloitte report identifies these potential barriers to the recovery of real estate:
1. Declining real estate values. The high rate of unemployment and drop in consumer spending in 2009 is at fault for the unfortunate impact on real estate. An increased supply of rental space led to lower rental prices, which decreases the value of the property. Real estate will see life again when there are better employment figures and increased consumer spending, which would subsequently drive demand for rental properties.
2. Debt maturity and credit access. The real estate market is predicted to undergo a slow but sure recovery over the next 9 to 18 months but the long duration may create a struggle for owners and mortgage holders who could face foreclosure. Opportunistic investors are seeking strategic positions with lenders to grab a piece of these distressed assets at a good price.
3. Stalled construction. With companies holding onto an excess of rental capacity, the necessity for new construction is nonexistent. It is illogical to build something new if there is nothing to justify doing so.
Real Estate Expectations
Most real estate asset classes are expected to bottom out and recover throughout 2010. Rentals will see life again as we see job growth and increases in consumer spending and GDP. Hospitality and multi-family residential families are predicted to recover first, in the short term. Commercial properties will see a slower, longer-term recovery phase. With regards to office space, higher employment figures are the sole determinant for rebuilding a competitive market for such rental properties.
Investors have expressed their anxiety over an abundance of capital but have been reluctant to invest until the market bottom was on the horizon – once again, signaled by job growth and consumer spending. Those with available capital come not only from the domestic arena but also from foreign regions (primarily China, Korea, Germany and the Middle East.
The real estate market as a whole has started to show signs of stabilization, accompanied by a recovering job market and loosened grip on consumer spending. According to Deloitte’s “Perspectives on Real Estate: Uncovering Opportunity in a Distressed Market” report, investors in standby mode are awaiting the opportunity to jump in on what used to be a highly profitable asset class – with action contingent on improving unemployment and GDP numbers.
Potential Barriers to Recovery
The Deloitte report identifies these potential barriers to the recovery of real estate:
1. Declining real estate values. The high rate of unemployment and drop in consumer spending in 2009 is at fault for the unfortunate impact on real estate. An increased supply of rental space led to lower rental prices, which decreases the value of the property. Real estate will see life again when there are better employment figures and increased consumer spending, which would subsequently drive demand for rental properties.
2. Debt maturity and credit access. The real estate market is predicted to undergo a slow but sure recovery over the next 9 to 18 months but the long duration may create a struggle for owners and mortgage holders who could face foreclosure. Opportunistic investors are seeking strategic positions with lenders to grab a piece of these distressed assets at a good price.
3. Stalled construction. With companies holding onto an excess of rental capacity, the necessity for new construction is nonexistent. It is illogical to build something new if there is nothing to justify doing so.
Real Estate Expectations
Most real estate asset classes are expected to bottom out and recover throughout 2010. Rentals will see life again as we see job growth and increases in consumer spending and GDP. Hospitality and multi-family residential families are predicted to recover first, in the short term. Commercial properties will see a slower, longer-term recovery phase. With regards to office space, higher employment figures are the sole determinant for rebuilding a competitive market for such rental properties.
Investors have expressed their anxiety over an abundance of capital but have been reluctant to invest until the market bottom was on the horizon – once again, signaled by job growth and consumer spending. Those with available capital come not only from the domestic arena but also from foreign regions (primarily China, Korea, Germany and the Middle East.
Monday, March 22, 2010
Loan Modication Getting Traction
After a dismal start, the Obama administration’s antiforeclosure efforts are finally gaining some traction. But the results are still paltry when set against the vast sea of homeowners in trouble.
The Treasury Department said on Friday that more than 168,000 households had received permanent new mortgages under its year-old modification program, up from 117,000 in January and 67,000 in December.
An additional 92,000 permanent modifications are pending. Borrowers with permanent modifications save a median of $500 a month, the government says.
The homeowner rescue effort, started with much fanfare a year ago, is one of the administration’s biggest initiatives to help the housing market and indirectly the larger economy. But it has been widely criticized for overpromising and underdelivering.
Critics saw little in the February report to change their minds.
“It’s a little bit of a help, but it’s not a big help, considering six million people are behind on their payments and at risk of foreclosure,” said Sherry Cooper, global economic strategist for BMO Financial Group.
Of the lenders participating, Bank of America has by far the largest number of eligible delinquent borrowers, nearly 1.1 million. Only 21,000 loans have been permanently modified; 22,000 more are pending. Many more are in trial modifications with an uncertain fate.
When the program was introduced, it was described as a stability initiative that would lower payments for as many as four million homeowners. But the number of trial modifications, which last three to five months, has barely surpassed a million, and the growth is slowing. In February, the number of trial modifications increased by 73,000, about half the number that signed up during the fall months.
The likeliest explanation is that the pool of borrowers who are both willing to seek and eligible for a modification is drying up. The Treasury puts the maximum number of potential modifications at 1.8 million, though it may be smaller.
Some borrowers who got a temporary modification but did not qualify for a permanent one have said they ended up worse off financially.
Alan M. White, an assistant professor at Valparaiso University School of Law who has studied the modification program, said too many applicants “have been sold a bill of goods.”
“Although 66 percent of them have made all their payments, fewer than 25 percent have been converted to permanent modifications,” Mr. White wrote in an e-mail message. “They are making payments but remaining in limbo or, worse, having their modifications canceled for lack of paperwork.”
A Treasury Department spokeswoman said the percentage of trial modifications converting to permanent status would rise over the next few months.
The Treasury is being accused of moving the goalposts a bit. It now says its intention was merely to offer help to those four million borrowers, not to make sure they actually got it. By this standard, the February report says the program is from 34 percent to 45 percent toward the goal. Remember to go www.rmloanmods.com or rmfundinggrup.com to get your options on your housing scenario.
The Treasury Department said on Friday that more than 168,000 households had received permanent new mortgages under its year-old modification program, up from 117,000 in January and 67,000 in December.
An additional 92,000 permanent modifications are pending. Borrowers with permanent modifications save a median of $500 a month, the government says.
The homeowner rescue effort, started with much fanfare a year ago, is one of the administration’s biggest initiatives to help the housing market and indirectly the larger economy. But it has been widely criticized for overpromising and underdelivering.
Critics saw little in the February report to change their minds.
“It’s a little bit of a help, but it’s not a big help, considering six million people are behind on their payments and at risk of foreclosure,” said Sherry Cooper, global economic strategist for BMO Financial Group.
Of the lenders participating, Bank of America has by far the largest number of eligible delinquent borrowers, nearly 1.1 million. Only 21,000 loans have been permanently modified; 22,000 more are pending. Many more are in trial modifications with an uncertain fate.
When the program was introduced, it was described as a stability initiative that would lower payments for as many as four million homeowners. But the number of trial modifications, which last three to five months, has barely surpassed a million, and the growth is slowing. In February, the number of trial modifications increased by 73,000, about half the number that signed up during the fall months.
The likeliest explanation is that the pool of borrowers who are both willing to seek and eligible for a modification is drying up. The Treasury puts the maximum number of potential modifications at 1.8 million, though it may be smaller.
Some borrowers who got a temporary modification but did not qualify for a permanent one have said they ended up worse off financially.
Alan M. White, an assistant professor at Valparaiso University School of Law who has studied the modification program, said too many applicants “have been sold a bill of goods.”
“Although 66 percent of them have made all their payments, fewer than 25 percent have been converted to permanent modifications,” Mr. White wrote in an e-mail message. “They are making payments but remaining in limbo or, worse, having their modifications canceled for lack of paperwork.”
A Treasury Department spokeswoman said the percentage of trial modifications converting to permanent status would rise over the next few months.
The Treasury is being accused of moving the goalposts a bit. It now says its intention was merely to offer help to those four million borrowers, not to make sure they actually got it. By this standard, the February report says the program is from 34 percent to 45 percent toward the goal. Remember to go www.rmloanmods.com or rmfundinggrup.com to get your options on your housing scenario.
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