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2 years, 2 months ago
  • This is false. There are not going to be recasts in 2015-2017. DDay doesn’t know what he is talking about.

  • DDay, I wish you knew what the fuck you were talking about.

    In fact, by the end of this, HAMP may not help even the borrowers secure in permanent modifications. Not only are the modifications of inferior quality, and not only have they led to high re-default rates already, but most of the permanent modifications are not permanent at all.

    Three clear falsehoods in one statement. Two of these claims with relative truths. The mods may be inferior to preferred policy, but they are superior to the modifications offered prior to HAMP’s creation. Same thing with redefaults. Redefaults on HAMP mods are actually a lot lower than redefaults on traditional mods. The claim that the mods are not permanent, however, is an out-and-out falsehood.

    Barofsky notes in the book that they have five-year time limits, with interest rates rising and payments returning to their original size at that time. So in 2014 and 2015, we’re going to see hundreds of thousands of recasts, like on an adjustable-rate mortgage. Maybe the borrowers will have righted their financial ships by then, or saved up enough to move on. But the more logical scenario is for more defaults at that time. But by then, the banks will have built their fortress balance sheets (with lots of government help) and won’t mind another half a million foreclosures.

    I’m going to assume that you’re an idiot and lack the ability to understand what Neil Barofsky wrote rather than assuming that Neil himself didn’t understand it. A permanent HAMP mod does not have a “five year time limit.” Rather, the mods are structured as “step rate” modifications. The interest rate can be lowered to 2% for up to five years. After that, the rate “steps up” at a maximum of 1% per year until it reaches the capped rate. The capped rate is the Freddie PMMS rate rounded to the nearest 0.125%. Right now, that makes it 3.5%. So, when year six rolls around on a permanent mod prepared today, the interest rate is going to jump from 2% all the way up to the sky-fucking-high rate of 3%. In year seven, it’ll jump all the way up to 3.5%. The horror. THE HORROR!

    The loans do not “reset” after year five, and they never go back to the original rate on the loan. Once again, I reiterate, you’re an idiot.

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