BLOG VIEW: From The Federal Level, Down To The Grassroots

ast weekend, I had the rare opportunity to see one of the most legendary figures in U.S. history, President Abraham Lincoln. More accurately, I saw an Honest Abe impersonator, who was visiting my hometown's historical society for a bicentennial celebration of the former president's birth. True, the technical 200-year mark of Lincoln's birth came and went in February, but historians nationwide are celebrating the milestone throughout the year with events similar to the one held in my town. Unfortunately, Lincoln's bicentennial was not the only milestone I learned about this weekend. The [link=][u]Center for Responsible Lending[/u][/link] (CRL) released a statement drawing attention to this year's one millionth foreclosure start. At last check, the policy center's foreclosure ticker had grown to 1,022,592 starts since Jan. 1. Not as if anyone forgot that foreclosures are happening (especially anyone reading a Web site with "mortgage" in the title), but the CRL's press statement was particularly sobering. This New York Times [link=][u]article[/u][/link] from Tuesday evokes a similar sentiment. It tells the story of Eileen Ulery, an Arizona homeowner since 1997. Having recently lost her job, Ulery is having trouble paying her mortgage. She visited the Making Home Affordable site, and after taking an eligibility test, contacted her lender (Countrywide-turned-Bank of America) to inquire about a loan modification. BofA offered to refinance, according to the NYT article. All she had to do to qualify for a monthly payment reduction of $79 (!) and a slight interest-rate increase (!!) was fork over $18,000 (!!!). Does this suggest Making Home Affordable (MHA) is an utter failure? Well, no. That'd probably be a little too premature a statement. But a Treasury spokesperson's response to the NYT's question regarding the number of MHA mods executed is not reassuring. From the Times: "[Treasury spokesperson Jenni] Engebretsen declined to say, noting that the Treasury was working with mortgage companies to "fine-tune reporting systems.'" Uh-oh. Here's hoping the fine-tuning is achievable and not just a PR attempt to mask disappointing numbers. The reporting system isn't the only component having difficulty keeping up with the rapid and ambitious implementation goals set by the administration. BofA, for its part, says Ulery was offered a refinance and not a modification because systems for borrowers in her position – struggling, but current – are still being integrated. The intentions and shape of the Treasury's program are admirable, but are they realistic? Short sales and deed-in-lieu incentives seem to add a sheen of newfound realization that not all mortgages are created equal, and home retention is not only an option. That's probably a wise admission, but some of the guidelines and their applicability have been called into question. Can they be implemented on a large scale? As one member of the Treasury's advisory committee recently told [b][i]Servicing Management[/i][/b], "Just saying it's so, doesn't make it so." (The gist being that setting hard-to-reach objectives does not equate to [i]meeting[/i] said objectives). Perhaps the program will be improved by including more grassroots initiatives, such as the one recently highlighted by [link=][u]The Stamford Advocate[/u][/link] (Conn.). START Now!, a foreclosure counseling effort started in April by Goldman Sachs trader Christopher Meek, is reporting success, albeit on a much smaller scale than the Treasury's program. The group holds counseling and loan modification events around Connecticut and connects borrowers and lenders. After a letter-writing campaign, Meek received support from a handful of banks (regional institutions like People's United and Webster, as well as the larger HSBC), and at an April event held in Stamford, he was able to help 41 homeowners lower their payments, the Advocate reports. While the one millionth foreclosure was being started over the weekend, START Now! was holding another counseling event. This time, with the help of the nonprofit Housing Development Fund, the list of participating banks grew to include biggies like Chase and BofA. Of course, just as it's too early to write off MHA, it's too early to know for sure whether the START Now! events are resulting in modified payments that are sustainable over the long term. But, as mountains of data support, lowered monthly payments improve recidivism rates. – John Clapp, editor, [b][i]Servicing Management[/i][/b] (Please send any comments on this blog to clappj@sm-onli


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