They Haven't Managed to Stop the
Nation's Foreclosure Rate From Rising.
Why? It's Simple ...
All those modification efforts can't overcome the negative impact of surging unemployment.
Many borrowers lied about their income and their assets in the first place, meaning they can't even make the reduced payments their lenders are offering.
Others were speculators and second-home owners, who don't qualify for relief.
Home prices are falling so far, so fast, that millions of borrowers are underwater — owing $20,000, $50,000, even $100,000 more than their homes are worth. They have little financial incentive to stay in their houses — even at a lower monthly payment — because they know they won't breakeven for years, if ever. And many of them know darn well they can rent for less ... sometimes much less ... at a house or apartment down the street or across town.
Still others have loans that were ultimately sliced, diced, and repackaged into complex securities — now owned by various Ferrari-driving hedge fund managers who leveraged up to buy junky paper just a few months after they got out of B-school.
Because of the "miracle" of this financial alchemy ... which made Wall Street rich beyond measure ... these borrowers are stuck. Their loan "servicers" WON'T modify their loans because they're afraid of getting their pants sued off by the investors who own securities derived from those underlying loans, securities that in some cases can lose value if the loan terms are changed. Full Story.