As servicers step up efforts to modify loans and keep borrowers in their homes, many are tripping over stumbling blocks in the form of home equity loans and other second lien mortgages. House Financial Services Committee Chairman Barney Frank has sent out a petition to some of the nation's largest junior lien holders demanding that they take "immediate steps to write down second mortgages" to create a clear path for sustainable loan restructurings, especially since the prospect for any real return on these seconds is negligible, Frank says.
Many lending groups have expressed serious concerns about several proposed regulations under the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). To address these concerns, a number of national and local trade groups, led by the Mortgage Bankers Association, filed a comprehensive comment letter with HUD on Friday. While the groups support aspects of the proposal, the letter says HUD is exceeding its statutory authority under the SAFE Act by establishing a backup system and determining whether state laws meet the SAFE Act's minimum requirements.
The 29 basis-point (bp) increase in delinquencies to 6.26 percent at the end of February was driven in large part by upcoming maturities from U.S. commercial mortgage-backed securities (CMBS) deals originated in 2005, according to Fitch Ratings. The agency says these five-year loans will have difficulty refinancing this year as liquidity remains limited, and warns that in many cases, sponsors will have to either contribute additional equity or look to their servicers for extensions and modifications.
Driven by legal actions against mortgage modification firms, overall mortgage litigation hit its highest level yet last quarter, according to recent industry study by the Washington, D.C.-based law firm Patton Boggs, LLP. The firm's analysis shows that loan modification cases more than doubled in the last three months of 2009 - and it appears the trend will persist as state and federal agencies continue to crack down on foreclosure rescue fraud.
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