Lowell Deeds

The latest on real estate recordings and new technology from the Middlesex North Registry of Deeds in Lowell

January 28, 2009

Modifying Mortgages

by @ 8:18 am. Filed under Real Estate, Current Events

One of the major differences between this housing collapse and prior ones is that in previous times, lenders retained more authority over home mortgages and were able to either modify the terms in a way that allowed the homeowner to stay in the residence or to authorize “short sales” that allowed the homeowner to sell the house for less than was owed on the mortgage thus avoiding the added costs of foreclosure. The recent “commoditization” of real estate lending, where mortgages were not held by a single entity, but were pooled together with thousands of others and sliced up into bonds that were sold to investors, made it much more difficult if not impossible for lenders to modify individual loans. Attorney General Martha Coakley obviously recognizes this, because she has filed legislation that would require lenders to take “reasonable efforts to restructure loans” prior to resorting to foreclosure.

Bank of America also recognizes this situation and the public relations damage that is being caused because of it. Today, that institution has a full-page ad in the New York Times. Here’s a portion of the ad’s text:

“We’re working to help people stay in their homes, not just buy them. At Bank of America, we’re taking the lead to change how the lending industry works with borrowers. for customers in need, we’re offering to modify over $100 billion in mortgages to help keep up to 630,000 borrowers in their homes. And it’s working. In 2008, we’ve already helped over 230,000 customers through our loan modification programs.”

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