Todd Murphy's Law

Why Work-out a distressed loan when you can charge big fees instead?

The New York Times ran an interesting article today reporting that lenders not anxious to do work-outs because they will give up lucrative delinquent fees.  Its nice to know the banks are cooperating with the White House so well.

Read the article here.

Commercial Loans Failing at Rapid Pace

U.S. banks have been charging off soured commercial mortgages at the fastest pace in nearly 20 years, according to an analysis by The Wall Street Journal. At that rate, losses on loans used to finance offices, shopping malls, hotels, apartments and other commercial property could reach about $30 billion by the end of 2009.

The losses by regional banks on their commercial real-estate loans will be among the most watched details as thousands of banks report second-quarter results over the next two weeks. Many of the most troubled banks have heavy exposure to commercial real estate. So far, 57 banks have failed this year.

Read the entire WSJ article here.

Subprime Resurfaces as Housing-Market Woe

The U.S. housing market is facing new downward pressure as holders of subprime-mortgage bonds flood the market with foreclosed homes at prices that are much lower than where many banks are willing to sell. Read article here.

Mortgage-Rescue Plan to Cover More Borrowers

The Obama administration is expanding the number of borrowers who can refinance home loans under its housing-rescue program, an acknowledgment that more needs to be done to help people who are upside down on their mortgages.

The administration said Wednesday that borrowers with mortgages worth up to 125% of their home's value will now be eligible to refinance under its program, up from a 105% limit.

To be eligible, borrowers must be current on their mortgages and have loans owned or backed by government-controlled mortgage companies Fannie Mae and Freddie Mac.

Secretary of Housing and Urban Development Shaun Donovan said the higher limits "will make a critical difference in our ability to help many more Americans...to stay in their homes."

Nearly 30% of homeowners with mortgages owe more than their homes are worth, according to Moody's Economy.com.

Wednesday's move is the latest indication that the refinance program, announced in March, has fallen short of expectations. In mid-June, the administration said 20,000 borrowers had refinanced under the program. The administration had previously said that the plan could help four million to five million borrowers who owed 80% to 105% of their home's value.

As recently as late April, Mr. Donovan had rejected the idea of expanding the program to borrowers who were more deeply underwater.

As many as three million borrowers could be eligible for the expanded program, according to Credit Suisse. But many of them have little incentive to refinance at current rates or couldn't qualify because of other limitations. Read more here.

Banks More Willing To Hold 'em

It seems banks are more willing to hold on to distressed properties than to make deals - at least for now.  Here is a series of recent articles on the subject.

New Evidence on Foreclosure Crisis: No Money Down, Not Sub Prime Loans Led to Mortgage Meltdown

Not Much Relief

So Many foreclosures: So Little Logic.

Cuomo Investigates Modification Companies

NEW YORK, NY (June 9, 2009) - Attorney General Andrew M. Cuomo today announced his office is taking legal action against a leading New York foreclosure rescue company for charging illegal up-front fees and engaging in consumer fraud. The company targets homeowners facing foreclosure by claiming that it can save their homes, but often fails to provide the services promised. The Attorney General’s Office served a notice of intent to sue on American Modification Agency, Inc. (“Amerimod”) and its owner and President Salvatore Pane, Jr. Amerimod is headquartered in Uniondale, NY and claims to operate in all 50 states, servicing thousands of consumers nationwide.

Read Cuomo's Press Release here.

Help for People Facing Foreclosure

HomeFree (www.homefreeusa.org) is one of just 15 "intermediaries" approved and funded by the Department of Housing and Urban Development to provide grants and capacity-building technical assistance to community-based housing counseling agencies. The nonprofit also is itself a HUD-approved housing counseling agency. And, an informative article here.

Bernanke Bid to Lift Housing Scuttled by Rising Rates

Federal Reserve Chairman Ben S. Bernanke’s efforts to bring down borrowing costs to revive the housing market and help the economy are stalling. Mortgage rates are almost back to where they were in March before the 30-year rate fell to a record and sparked a refinancing boom. Mortgage delinquencies rose to a record 9.12 percent of U.S. home loans and house prices dropped the most on record in the first quarter, industry reports show. Read the entire article on Bloomberg here.

RealtyTrac: April foreclosures rise 32 percent

by The Associated Press

Wednesday May 13, 2009, 1:13 PM

MIAMI -- The number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates, according to data released today. Ohio was in the top 10.

Read the article here.

Fannie needs $19 Billion

Fannie Mae issued a grave warning about its future on Friday, saying it
needed $19 billion in additional government aid as job losses grew and

risky loans made in the housing boom went bad at an unnerving pace. Read Fannie Mae's press release here.