HAMP: The Illusion of Loan Modifications Does Not Loan Modifications Make

Yesterday I did the farce of loan mods and coincidentally asked for some actual numbers. Well Market Ticker has kindly provided them and they are - as suspected - low. As in zero. It doesn't take a mathlete to figure out that something is not right here, or perhaps we are perfectly on schedule for financial doomsday and this is but one more reminder of how impotent and useless the government is at "rescuing" the poor sap of a homeowner.

See, HAMP Really Was a Scam (Market Ticker):

You have give these banksters credit - they'll lie and lie and lie some more....

More than 650,994 loan revisions had been started through the Obama administration’s Home Affordable Modification Program as of last month, from about 487,081 as of September, according to the Treasury. None of the trial modifications through October had been converted to permanent repayment plans, the Treasury data showed. That failure is getting the administration’s attention.

None? Out of 651,000 "trial" modifications none have turned into a permanent repayment plan?

That's all the borrower's fault, right? There's no collusion here, yes? No intent to screw the taxpayer, having taken their money? Nothing wrong here at all... it just calls for the administration's "attention."

Yeah, right.

“We are taking additional steps to enhance servicer transparency and accountability as part of a broader focus on maximizing conversion rates to permanent modifications,” Treasury spokeswoman Meg Reilly said in an e-mail yesterday. The Obama administration plans to announce additional steps tomorrow, including new private-public partnerships and resources for borrowers.


What's worse, Bank of America has only 14% of their "eligible" loans in a trial modification. Citibank has 40% under trial, and JP Morgan/Chase 32%.

All in all, only 20% of those "eligible" have been offered, accepted, and are in a trial but zero percent - zero - have actually turned into a permanent loan modification that the homeowner can count on.

The administration program requires banks that received federal aid from the Treasury’s Troubled Asset Relief Program, or TARP, as well as mortgage-finance companies Fannie Mae and Freddie Mac to lower monthly payments for borrowers at “imminent risk” of default.

That's some "requirement" eh? Zero percent completion from June to October? That's five months, and the "trial" period is supposedly 90 days, so this means that either (1) nobody did anything for the first two months, or (2) not one borrower successfully completed a trial between June and now.

If the Obama Administration and Treasury was serious about this "help" they would be seeking indictments.

Oh wait - they can't - there was no "or else" put into the law enabling HAMP, was there? Just looked again - nope - no criminal or civil sanction in there for banks who are allegedly "required" to do these things.

I repeat: A law without a punishment for failure to comply is no law at all - it is nothing other than a scam and a fraud perpetrated by the government to make you "feel good" while in fact doing exactly NOTHING.

As I said yesterday, the Treasury politely suggests TARP recipient banks do "the right thing" and offer loan modifications, it's not like Geithner is banging down Jamie Dimon's door with an AK-47 saying "you better modify or else..." - what the hell would the "or else" be?! Again, you can't have a sword fight if your sword is made of duct tape and cardboard.

I've said it before and I'll say it again: STOP PAYING.

(Legal disclaimer: Not paying your mortgage will result in more than a surface wound to your credit score. Perhaps this is something that is important to you, and therefore before taking my advice, make sure you weigh your options - keeping in mind that the Fairy of Free Money will not be flying through your window to save you from foreclosure - and get real advice from an actual professional, not just this shit disturbing hipster. But seriously. Just stop paying.)

Anyone else starting to feel like we're bearing witness to little more than a third rate Las Vegas magic show? Where's the part where they cut Geithner in half?

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


wcv said...

Making the mods permanent requires income documentation.

That's the problem, everybody was lying about their incomes on the original loans.

OldSouth said...

Sorry, I don't understand! Our little local bank made a mortgage on our home available. They make money on it, but that's their job. We're not unemployed or otherwise in distress, and we promised to pay them their money back.

You say we should stop paying?

Credit score aside, it's dishonorable not to pay! They haven't wronged us in any way I can discern, why should we screw them? They also didn't take (or need) any TARP money.

I really, truly , don't understand...


Perhaps I should have been clearer in my point since you are not the first one to say "huh?!" in response...

I am talking about getting their attention if you are trying to complete a loan modification. If you have no reason to stop paying, then of course you should continue to do so. And you're right, even if the face of dishonorable behavior by TPTB, it is all we can do to "do the right thing" and that continues to be the best avenue to take.

I am talking specifically to people who are trying to complete a loan mod, people who cannot afford to keep paying but continue to do so and fight this uphill battle against the big banks and sheisty loan mod companies. Those guys.

Meanwhile, I will be over here paying my rent every month. :)