Mark-to-Modified Market (the Home Game Version)
Housing prices remain elevated, inventory overhang is huge, cancellations are still rampant, credit is tight, and foreclosures are still rising. It is in this environment that several new plans to modify loans are starting to be enacted:
Fannie Mae and Freddie Mac are expected to announce plans Today to speed up the modification of hundreds of thousands of loans held by the housing finance giants. The GSEs will reduce principal or interest rates on some loans and extend the terms of others. The program is an extension of the Hope Now alliance.
The effort will target certain loans that are past due and will aim to bring the ratio of household debt to income for these borrowers down to 38%
Citigroup is contacting 500,000 homeowners with $20 billion in mortgages during the next six months. About 130,000 mortgage customers are expected to qualify.
JPMorgan Chase (and their Washington Mutual acquisition) announced plans last week to cut monthly payments by lowering interest rates and temporarily reducing loan balances for as many as 400,000 homeowners.