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Inside Nonconforming Markets

September 11, 2009

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HAMP Participation Below Par For Most Non-Prime Servicers

Most non-prime servicers participating in the Home Affordable Modification Program have so far been less successful than the industry overall, according to a new analysis by Inside B&C Lending. Based on the average share of trial HAMP mods initiated by all servicers, only three servicers that predominantly handle non-prime mortgages had above-average participation... [Includes one chart] Read More

Lack of Loss Mit Uniformity Frustrates Borrowers

Non-prime servicers’ seemingly arbitrary handling of loss mitigation is a growing concern for troubled borrowers. While the Home Affordable Modification Program aims to standardize the loss mitigation process, servicers’ loss mitigation tactics and HAMP implementation have been anything but uniform. A recent Inside B&C Lending analysis uncovered two wildly different scenarios for... Read More

Option ARM Outlook: Underwater Payment Shocks

Even without further declines in home values, defaults on option ARM loans are expected to soar as loan recasts occur, as these borrowers are unable to effectively refinance into alternative mortgage product, according to a new analysis by Fitch Ratings. As of this week, 46.0 percent of securitized option... [Includes one graph] Read More

Servicers Urged to Target ‘Cash-Flow Managers’

While the number of “strategic” mortgage defaults continues to increase, analysts have labeled a large segment of non-prime borrowers who closely mimic those who intentionally default to improve their financial situation but could be favorable candidates for loan modifications. The so-called cash-flow managers continue to make occasional payments on their mortgages, indicating their... Read More

Cramdown Calls Getting Louder in Congress

Congress’ cramdown debate looks to be far from over as Democrats have increased calls for judicial loan modifications recently. Servicers’ loss mitigation efforts have not lived up to the expectations of some in Congress, reviving the push for cramdowns.The Obama administration’s initial outline for the Home Affordable Modification Program noted that the administration would... Read More

IRS Moves Could Limit Home-Equity Lending

The IRS could soon increase enforcement of mortgage-interest deduction regulations as borrowers have claimed tens of thousands of dollars in noncompliant deductions in recent years. The enforcement could limit the allure of home-equity lending, and lenders could be called on to help the IRS with enforcement. “Because we have little information on taxpayers’ mortgage debts, taxpayer noncompliance... Read More

Mixed Rulings on Subprime-Related Lawsuits

The recent dismissal of a lawsuit against a subprime lender looks to be a small victory in the ongoing battle between investors and publicly traded companies involved in the subprime sector. This month, the U.S. Court of Appeals for the Eighth Circuit affirmed the dismissal of a complaint alleging that NovaStar Financial misrepresented its financial condition. The court... Read More

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