Hey, how do you think this will work? U.S. Treasury to Push Lenders to Finish More Home Modifications.
And Bloomberg’s account of what regulators and bankers are doing has even more little terrors hiding in it. Things like of 651,000 “trial modifications” — essentially a reversion to “teaser rates” that helped get us into this mess — exactly zero of them have been made permanent. Zero.
You want to know why? Because the borrowers cannot afford the loans long-term at any rate and a permanent conversation guarantees the bank cannot unload the loan, even if they do get a slice of the $75b. federal bailout modification program. Oh, but it gets better. Guess who the feds say is sitting on almost 1 million modification-eligible loans? Bank of America.
But BAC says it cannot possibly modify that many loans because: 1) the borrower has already bailed on the loan and the home is empty 2) the borrower never made enough money to qualify for such a large loan given sane lending standards 3) the borrower is unemployed.
What to do then, BAC? Guess you better take write downs on, oh, 500K of those loans ASAP. You can see the rock and hard place banks have themselves in right now.
Bonus Observation: Kudos to Mark Johnson of the UPoR writing from Raleigh on Charlotte’s real estate meltdown. Johnson ignored Rent Seekers Guild happy talk and pointed out that Mecklenburg’s foreclosure rate far outpaces that of the Triangle or Triad. Local foreclosures were up 44 percent through October. Expect the trend to continue at least through the middle of next year.
Charlotte sat the very top of a financial Ponzi scheme and the collapse is going to be long, hard, and painful.
