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Well it is a funny world isn’t it? Federal law enforcement and regulators are going after loan modification companies with a vengeance, yet the US Treasury is handing out BIG incentives to get them done.
Tim Manni, a writer for HSH Associates Financial covers another attempt to increase loan modifications:
“With this program, the Treasury is now paying financial incentives to all parties involved in the modification process (borrowers, servicers, and now lenders). If you recall, the notion that Washington was going to pay borrowers to remain current and services for their “success” was extremely controversial.”
So, the incentives for loan modifications continue to escalate, but the business seems to still be too complex to really efficiently execute, or make business sense.
One of the problems may be the focus on trying to cover losses instead of finding a way to make the process commercially sustainable. The objective is clear-cover the potential risk:
“The purpose of the program is to encourage additional lender participation and HAMP modifications in areas with recent price declines by helping to offset any incremental collateral loss on modifications that do not succeed.”
Are you in the loan modification business? Can you add some color to this? Please comment below.
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