In my humble opinion we have a problem here.
Banks are not voluntarily moving in their own or the markets interest.
There is an overwhelm and a jam up.
We see this in negotiating on short sales. Bad information, ivory tower assumptions based on poorly done bpo appraisals stop rational deals from occurring.
Owners think that banks will act in good faith and have the capacity to do so. Having called thirty or more people in foreclosure this week already and trying to find those who want help selling thier home many are trying to mitigate or modify their loan.
There is a general belief among the people i talk to who have recently received thie first notice of foreclosure that there is a large payment reduction possible.
From the report out today of treasury it appears thats not the case. Only 9 percent of those who are eligible for modifications received them.
It is time for bankruptcy judges to wrild power and write down principle in certain cases. A focus needs to be put on each case with leverage and this is not happening.
From NYT Aug 11:
Michael Calhoun, president of the Center for Responsible Lending, was also skeptical that banks had enough incentive to comply with the program. The Treasury Department offers $1,000 payments to lenders for each modified loan and pays lenders part of the difference between borrowers’ old monthly payments and their new ones.
“For over three years, leaders have insisted they can handle this crisis on their own, but today’s report shows that the time for voluntary action is over,” Mr. Calhoun said in a statement.
Kathleen Day, a spokeswoman for the center, said: “There’s still a lot of market reasons why they wouldn’t do it. Some may not have the warm bodies to do it. They may feel overwhelmed.”
That would change, she said, if banks knew judges could modify mortgages in bankruptcy courts.