Amherst: Few HAMP Modifications to be Successful
by CalculatedRisk on 10/14/2009 09:54:00 PM
From Austin Kilgore at Housing Wire: Chances Are, Most HAMP Mods Won’t Work: Amherst
The Making Home Affordable Modification Program (HAMP) adds another layer of uncertainty for private label securitization investors, making it more difficult to predict cash flows, according to a report by analysts at Amherst Securities Group, who added they expect relatively few HAMP workouts to be successful.
Additionally, it’s taking longer for bad mortgages to move from last payment to liquidation, and the pace varies by servicer: “The trial modification period essentially holds the loan in a suspended state for 90 days, making it difficult to assess what is happening with modifications
,” the report said ...
While HAMP workouts are keeping the pools of real estate owned (REO) property relatively small
, Amherst predicts a low percentage of eventual success of HAMP modifications is inevitable.
emphasis added A few comments:
The trial period has been extended for an additional 60 days
- so make it suspended animation for 150 days! See One Company Responsible For Nearly Half Of All Permanent Mortgage Modifications Treasury and COP note that many of those temporary modifications may be in process of getting paperwork submitted in order for them to achieve permanent status. Treasury granted a two-month extension -- on top of the three-month trial -- for borrowers and servicers to get their documentation ready.
Much depends on the success of HAMP. If many of these modifications don't become permanent there will be another flood of foreclosures on the market. BofA has already promised a "spike" in foreclosure at the end of this year, see: Delayed Foreclosures Stalk Market We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running" for a loan modification or other alternatives, says a Bank of America Corp. spokeswoman.
In many areas the "the pools of real estate owned (REO) property" has all but dried up. The HAMP program is restricting supply.
Note: On the demand side, the first-time homebuyer tax credit combined with loose FHA underwriting
, is boosting demand. Restricted supply and more demand has created a buying frenzy
and pushed up prices in some low end areas. I think it is time to short the homebuilders again or is it.
Wednesday, October 14, 2009 House Buying Frenzy
by CalculatedRisk on 10/14/2009 06:20:00 PM
The real estate market has gone crazy. At the low end we've been seeing many offers per house for some time, and recently agents have been telling me there is almost no inventory. Jim the Realtor has been reporting on this in San Diego, see: Hot All Over and The “Euphoria Express”
And from Diana Olick at CNBC today: Lunacy in Las Vegas Housing (ht Larry)
Olick include an email from a real estate agent to a client "Katie":
- This market is crazy and many things are just not going to make any sense.
- Properties are selling in the blink of an eye.
- Properties are getting multiple offers within a few days of being on the market, the most offers I’ve heard a house had recently was 44 offers (I know, crazy).
- 40% of all transactions are cash purchases,
which makes it harder for the buyers who are financing to get their offers accepted.
- We have 1/2 the inventory we had a year ago and 4 times as many buyers as we did a year ago. And more ...It definitely seems crazy.