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| Tuesday, February 9, 2010 |
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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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October 2, 2008 4:01 PM ET
Loan modifications for financially pressed homeowners have soared six-fold in the last year, though mortgage servicers are still making little use of the most effective approach to reducing borrowers’ delinquent payments. Modifications rose to about 30,000 in August, from about 5,000 a year before, according to a report Wednesday by Rod Dubitsky, head of asset-backed securities research at Credit Suisse. The increase is a result of the decline in the performance of subprime loans, as well as new government and industry efforts. “Our analysis does indicate some hope that indeed loan mods are a very useful tool in the housing rescue tool kit,” the eight-page report said. “Although mods have increased significantly this year, we think there is room for the industry to expand the scope, type and measurement of loan modification effectiveness.” Congress has looked to loan modification as a way to slow the skyrocketing number of foreclosures at the root of the current financial crisis. Several federal programs, including the Hope for Homeowners plan that is rolling out now, seek voluntary participation by mortgage servicers and the investors they represent to offer homeowners more favorable terms for their mortgages. Of the various types of loan modifications offered, the most effective at reducing consumer defaults is that of principal reduction, in which the servicer forgives a portion of the loan principal. This approach lowers the borrower’s monthly payment and negative equity, and is likely to help a homeowner stick it out. However, while principal modifications have jumped over the last year, they still accounted for only about 4.7% of the 30,000 loan modifications in August, according to the report. “Principal mods continue to be the poor stepchild in the mod tool kit,” the report said. “As the number of borrowers having negative equity keeps rising, we are seeing a growing need for such modifications.” Homeowner payments improved dramatically after principal modifications. About 80% of the mortgages that underwent principal modifications were delinquent prior to the changes. Only one in four was still delinquent eight months after modification, Credit Suisse said.
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