$75 Billion Carrot, but Few Nibbles

$75 Billion Carrot, but Few Nibbles
The New York Times

In March, the Obama administration began an antiforeclosure effort that offers lenders up to $75 billion in incentives to modify troubled mortgages. If that sounds like a lot of money, it is. But so far, it has not been enough to persuade the mortgage industry to do what is needed to help Americans stay in their homes and keep the economy from falling into deeper trouble.

The first report on the program, released last week by the Treasury Department, shows that as of the end of July, 235,247 mortgages had been modified on a trial basis. That is not even 9 percent of the 2.7 million troubled loans currently deemed eligible. (During the trials, borrowers are granted reduced monthly payments. After they pay on time for three consecutive months, the lowered payment will be fixed for at least five years.)

How to Save an ‘Underwater’ Mortgage
The Wall Street Journal

An epidemic of mortgage defaults and foreclosures is threatening the economic recovery. The problem is serious and getting worse. More than three million homes are now in serious default (nonpayment for 90 days or more) or foreclosure, nearly double the number a year ago. Sales of properties in foreclosure or serious default made up one third of all home sales in May and June.

Despite a slight uptick in house prices in some markets recently, the sales of foreclosed properties continue to dampen house prices and weaken banks’ balance sheets. The uncertain pace of future losses makes banks nervous about the adequacy of their capital, which discourages bank lending and economic growth.

Geithner says recession proves financial reform needed
USA Today

Treasury Secretary Timothy Geithner voiced confidence Thursday that President Obama's sweeping financial reform plan would be passed by Congress this year despite growing objections by regulators and lawmakers.

In an exclusive interview with USA TODAY, Geithner dismissed critics who largely would maintain status-quo regulation of the financial system in the wake of abuses that sparked a bruising recession.

All Eyes Turn To Meeting of Fed Committee
The Washington Post

No August vacation for economy-watchers yet, as another big week is on the way.

The main event is a meeting of the Federal Reserve's policymaking committee on Tuesday and Wednesday. It's a forgone conclusion that the central bank will leave its main target lending rate near zero and continue signaling that the number is likely to remain there for some time.

Loan modifications: salvation or scam?
Inman News

Financially challenged property owners have become a huge target for scam artists. Loan modifications can be especially risky. As a responsible Realtor, what can you do to protect your clients?

I recently interviewed Julie Harris, who trains Realtors on how to assist homeowners with the loan modification process. At the National Association of Realtors' midyear conference, the speakers on risk management insisted that Realtors who do loan modifications are illegally practicing law -- it is a practice to be avoided. Instead, they said clients should be referred to the lender, to a reputable loan modification company, or to an attorney.

Key Lawmaker Received Countrywide Loans
The Wall Street Journal

A powerful House Democrat who has turned down a Republican's call to subpoena records of a mortgage program at Countrywide Financial Corp. received two home loans from the lender.

Some information in the lawmaker's mortgage documents raises the possibility they were made through the program, which provided loans to public figures and other favored borrowers often at lower interest rates or with lower origination fees than were available to the general public.