Fewer trial Loans in Chico for the comming year but more Short Sales and REOs (Deals)

Wednesday, February 24, 2010

About 97,000 homeowners in the government’s mortgage modification program have been stuck in a trial period(loan Mod Limbo) for over six months. Most of them, about 60,000, have their mortgages with a single mortgage servicer, JPMorgan Chase.

Trial periods are designed to last only three months, after which mortgage servicers are supposed to either give homeowners a permanent modification or drop them from the program. According to a ProPublica analysis, about 475,000 homeowners have been in a trial modification for longer than three months.
A couple of key points on HAMP I've mentioned before: When the HAMP program began, the requirements for putting a borrower in a trial program varied by servicer. Some servicers put anyone who answered the phone, and said they'd make a payment, in to a trial program. Other servicers required homeowners to provide some initial documentation of income, and make the first payment, before putting them in a trial program.


Although the HAMP trial program was supposed to last 3 months, the period was extended to 5 months - and then eventually to the end of January (no matter when the trial started).

This suggests that there will be fewer trial modifications per month in the future (this is already happening) and a surge of trial cancellations in February. Bottom line on all this is there will be more deals for astute buyers over the next 12 months.