Home Affordable, Mortgage Fraud, Bank Balance Sheet

Home Affordable Gets a Solution for Second Mortgages

Okay, first off if you don’t currently read Mike Shedlock (aka Mish’s Global Economic Trend Analysis) immediately do so now (Mish’s RSS) and return. He seems to be one of the few not running a blind-sheep commentary on how the government (all parties included) are running this economic recovery.

Here are his thoughts on the latest “tinkering” with the Home Affordable program–incentives for the writing down of second mortgages to facilitate loan modifications, mortgage refinance, and or other foreclosure prevention.

The bill hugely rewards servicers for every loan they modify. This creates an incentive for servicers such as Countrywide (Bank of America) to modify loans whether or not that is in best interest of the mortgage holders. Worse yet, the Safe Harbor Provision goes one step further and shields servicers if they do commit such fraud.

Reverse Mortgage Volume Up and the Market is Changing Leaders

HUD is reporting that reverse mortgages applications surge–heading for mainstream type numbers, with a big year-over-year increase:

HUD’s FHA outlook report mirrors the optimistic outlook by showing that during FY 2009, 85,548 HECM applications have been taken, up 16.1% compared to last year.

Reporting on a Reverse Market Insights’ report, Reverse Mortgage Daily points out a significant shift in the reverse mortgage market:

JB Nutter has over taken Financial Freedom as the largest wholesale reverse mortgage lender.  The data shows that over the last year, Nutter saw its wholesale business grow 76.8% compared to Financial Freedom seeing it’s volume drop 41.3%.

Mortgage Fraud, an Epidemic?

It seems like there is a sudden outbreak of mortgage fraud:

• SEC charges ex-American Home Mortgage executives (Reuters)
• $70 million ponzi scheme in Maryland (baltimoresun.com)

Epidemic, or simply revelation brought on by volatile mortgage markets. Mortgage markets grow and expand–mortgage fraud grows and expands. Mortgage markets rapidly change directions–mortgage fraud scheme pop-out. No surprise.

Are Banks Getting Healthier?

It would seem that bank balance sheets are improving, but are they?

So you run a bank. And it’s not been the smoothest sailing lately. Sure, record-low interest rates let you make money writing mortgages and refis, which helps your bottom line. And maybe your active-trading division has provided a bump, especially in fixed-income products. But that still doesn’t get your numbers where you want them to be. There are a few little tricks that can get you there, from accounting wizardry to liberties with the Gregorian calendar.

Some clever accounting slight of hand.

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• New Mortgage Assistance Addressed Second Liens (mortgageloan.com)
• FHFA – “Examining the Making Home Affordable Plan” – Net Present Value Model (appraisalnewsonline.typepad.com)
• Making Home Affordable Program (bloghomedenver.com)
• Fourth Quarter Mortgage Statistics Are In (hsh.com)
• Making Home Affordable Mortgage Refinance & Modification Program (bargaineering.com)