Hamp

by Larry Levin

I read an article on Bloomberg a few days ago that I thought you may find interesting. You can read it all here about the HAMP scheme (Home Affordable Modification Program)

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0HakbseT9rk&pos=2 but I have a few excerpts below.

The U.S. Treasury Department will step up public pressure on lenders to finish modifying more home loans to troubled borrowers under a $75 billion campaign against the record tide of foreclosures.

More than 650,994 loan revisions had been started through the Obama administration's Home Affordable Modification Program as of last month, from about 487,081 as of September, according to the Treasury. None of the trial modifications through October had been converted to permanent repayment plans, the Treasury data showed. That failure is getting the administration's attention.

"We are taking additional steps to enhance servicer transparency and accountability as part of a broader focus on maximizing conversion rates to permanent modifications," Treasury spokeswoman Meg Reilly said in an e-mail yesterday. The Obama administration plans to announce additional steps tomorrow, including new private-public partnerships and resources for borrowers.

Bank of America Corp. was among the worst performers in the program, with 14 percent of loans in modification in October, according to the Treasury. The bank, the largest in the U.S. and the biggest mortgage servicer, has 990,628 eligible loans, a greater total than any other company on the Treasury's list. A spokesman for the Charlotte, North Carolina-based bank, Dan Frahm, has said the eligibility data may be overstated.

"As many as one-in-three of those borrowers listed as eligible for the program will not actually qualify for HAMP because the home is vacant, the customer has a debt-to-income ratio below 31 percent or is unemployed," Frahm said in a Nov. 10 interview.

Citigroup, the third-largest U.S. bank by assets, began 88,968 trial modifications, or 40 percent of its eligible mortgages. JPMorgan, the second-largest U.S. bank, has started 133,988 modifications, or 32 percent of those eligible, the Treasury said.

The administration's $75 billion Making Home Affordable program includes the mortgage modification initiative and loan refinancing through Fannie Mae and Freddie Mac.

Read what Meg Reilly from the Treasury said again above "We are taking additional steps..." In other words, the heat is coming down on the banks to do something they clearly do not want to do EVEN THOUGH there are apparently $75 billion in goodies for them.

Not only is this program clearly a failure, but a turkey as well if the banks don't want the fees. Not a SINGLE mortgage has yet to be modified! And why wouldn't they want those fees you're wondering? Do you remember that pesky unemployment rate that keeps getting WORSE? Yeah, that's the problem.

Robert Davis, executive vice president of the American Bankers Association in Washington, said that unemployment is "the primary driver of defaults right now." He said he was "puzzled" by the stepped-up pressure.

Well I agree with Mr. Davis there but I have a question I would put to him if I had the chance "Why do your banking cartel analyst's claim that unemployment is a lagging indicator and is of no consequence now, but those who run the cartel seem to think it is bad enough not to rework mortgages and accept fees?"

The only answer I would accept from Mr. Davis would be something like this "Oh that's an easy one: because the analysts don't give a rat's a$$ about reality. For them it's all about pumping equities. On the other hand, running the bank's operations is another matter and even we don't believe our own analyst's drivel."



Previous Day's Trading Room Results:

Trade Date: 11/30/09

E-Mini S&P Trades*
(before fees and commissions):


1) No "Secrets" trades filled today.

2) Algorithm positions (6)

3) "Reading the Tape" positions (21) ...combined Secret's, Algo, & "Reading the Tape" total...+13.00



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