More than 140,000 behind on mortgage payments
Here's the mortgage mess, Maryland-style, in a snapshot -- a chart that shows the growth in the number of homes whose owners are at least one payment behind.
It's been trending down a bit this year, good news if that continues. The 3 percent drop in the summer was the first year-over-year decrease since 2006. But I'm not hearing a lot of optimism out there about the possibility of big improvement soon, given the state of unemployment.
(These figures, in case you're wondering, are drawn from a Mortgage Bankers Association survey that covers nearly 90 percent of loans outstanding. The statistics aren't grossed up, meaning that the tally above is most but not all delinquencies.)
From the beginning, some firms have profited off the crisis by taking homeowners' money to negotiate for loan modifications but doing little or nothing. The Federal Trade Commission issued new rules last week banning fees until a loan agreement is hammered out that the homeowner finds acceptable. It also announced that it had convinced a federal court to temporarily halt operations at a Halethorpe mortgage-relief company that the agency said was taking advantage of clients.
A mortgage investors' group, meanwhile, contends that mortgage servicers -- the organizations receiving modification requests -- are themselves profiting when they choose to foreclose.
Mortgage 101 for those whose heads are spinning: Mortgage investors own the loans. Mortgage servicers oversee those loans for the investors, collecting the monthly payments and dealing with delinquency.Servicers responding to public complaints about high levels of foreclosures vs. modifications have frequently said, "Don't blame us, we're just following the investors' guidelines." But the Association of Mortgage Investors, which says it represents private investors, pension funds and endowments, issued an "oh yeah?" statement recently that says homeowners are being "victimized" by servicers:
It should be noted that the major servicers harm homeowners while benefiting themselves in the following ways:
Servicing Fees: Servicers generate significant servicing and late fees throughout the delinquency and foreclosure process. They can be reluctant to find quick sustainable solutions for homeowners. This is clearly evidenced by long call waiting times and high call abandon rates that homeowners experience when calling servicers.
Profits from Affiliated Companies: Servicers generate profits through affiliated companies during the process of repurchasing, insuring and liquidating homes from distressed homeowners. Servicers can be reluctant to aggressively pursue short sales and other viable options to foreclosure due to these above-market fees generated by affiliated companies.
Second Liens: Servicers own the second liens behind the first liens they service for investors. Their interest in the second liens can cause them to advise homeowners to defer payments on the primary mortgage while aggressively collecting on second liens to avoid losses to their own portfolio and balance sheet.