Hand wringing aside… there is a new cottage industry in the mortgage world.  It is called “loan modification.”  Whether it is an attorney seeking to find remedy for a client wanting to stay in their home in an increasingly hostile economic environment or a something-for-nothing hope peddler seeking to siphon off the remaining cash from a strapped homeowner,  the term “loan modification” has replaced “pay option ARM” as the product du jour.

What is a loan modification?
A loan modification is a permanent change in one or more terms of the loan.
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“As U.S. banks retreat, credit unions step up loans”

“As the U.S. economy weakens and the country suffers its worst housing crisis since the Great Depression, big “money center” banks — after years of reckless lending before the housing bubble burst — have cut back drastically on loans.

But lending by credit unions is steadily rising. Credit unions are nonprofit cooperatives owned by their depositors, or “members.” Credit unions are as a rule much smaller than commercial banks, with average assets of $93 million in the United States in 2007 according to the Credit Union National Association (CUNA), compared to $1.53 billion for banks.

According to CUNA, there are more than 8,000 credit unions in the country.”

Read the full article: “As U.S. banks retreat, credit unions step up loans”

“WASHINGTON — The government’s latest plan to help struggling homeowners eliminates a major bottleneck by giving mortgage investors more incentive to agree to refinancings. But lawmakers said Thursday they might go further after the November election and force reluctant investors to do more.”

Read the article: “New Loan Fix Is Unlikely the Last.”

Last year, the biggest convention excitement was getting to see middle aged mortgage bankers fire up their lighters watching Pat Benatar sing “love is a Battlefield.”  This year, it was quite different.  While the army of suits were in evidence, on a couple of the days, there were actual protestors (about 20) screaming at us as we entered the Moscone Center in San Francisco.  Their posters, banners and signs proclaimed “Housing is a Right,”  which as a base human need, could garner strong appeal.  However, bankers make loans not housing…and frankly, there are no “rights” to that.

I did notice that the protestors didn’t have a lot of stamina, as they all left pretty early in the morning.  But apparently, that was a ruse to bring their protests inside.  The Convention did have a lot more security than ever before, so after the two big intrusions into the general session, many were wondering how they got in.  Apparently – THEY REGISTERED!  I got that from a friend that works for the MBA.

As I walked through the gauntlet, I waved and was cordial…and I was told I “should go to jail and didn’t deserve a bailout.”  Funny thing is…I didn’t get a bailout.. nor did 99% of the convention.   Those titans of the mortgage industry don’t wander among the booths picking up toys, pens and post-it notes.  In addition, most of the bad guys are gone – beset by repurchase demands, losses and withering lines of credit.  Those left are mainly small business owners hoping to find relief to continue serving their clients and keep their employees.

When the protestor in the general session with Rove and McConnell went onstage, she made a beeline for Karl Rove intending to execute a “citizen’s arrest.”   While he is not my favorite Machiavellian politico, I still doubt he knows there is a T in mortgage.  I assume Dem McConnell wasn’t a target because they didn’t recognize him.

It made the news, which is probably all they were hoping for…but it reminds me of the concept of drowning and being angry with the water.

We all hope for change, and are working our best in the craziest environment most of us have ever seen.

By Mark Felsenthal

“WASHINGTON (Reuters) - Former U.S. Federal Reserve Chairman Alan Greenspan told Congress on Thursday he is “shocked” at the breakdown in U.S. credit markets and said he was “partially” wrong to resist regulation of some securities.

“Despite concerns he had in 2005 that risks were being underestimated by investors, “this crisis, however, has turned out to be much broader than anything I could have imagined,” Greenspan said in remarks prepared for delivery to the House of Representatives Committee on Oversight and Government Reform.

“Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially) are in a state of shocked disbelief,” said Greenspan, who stepped down from the Fed in 2006.”

Read the full article:”Greenspan “shocked” at credit system breakdown.”

The broker isn’t at fault because even though they sold the product, how were they supposed to know if people couldn’t afford it.  “I didn’t make the crack, I didn’t fund the crack… I just dealt it.”

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“Fed chairman says financial crisis will dampen economy well into 2009 and hints at future rate cuts; says recent actions by Fed, Treasury should help economy recover.

Federal Reserve Chairman Ben Bernanke predicted that the global financial markets crisis is likely to restrain the economy well into next year and signaled that the Fed may be getting ready to cut interest rates.

But he said he believes the unprecedented steps taken to have the Treasury Department and the Fed intervene in financial markets were done in time to prevent more expensive and permanent damage to the nation’s leading financial institutions.”

Read the full article:  “Bernanke: Economic outlook weaker”

Mortgage official: Federal government has power now to reduce foreclosures

Freddie, Fannie cut back mortgage fees
By ALAN ZIBEL
WASHINGTON

Mortgage finance companies Fannie Mae and Freddie Mac, seized by the federal government last month, are rolling back fees imposed as they struggled to shore up their finances over the past year.

Freddie Mac said Friday it would not impose a fee increase scheduled to go into effect next month. The announcement followed a similar reversal by Fannie Mae Thursday night.

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