It is safe to say that Peter Slagowitz is one of many mortgage market insiders who developed a strong disliking of the Dodd-Frank Act’s controversial
The chief executive officer of Spurs Capital, a New York-based investment management firm that focuses on real estate investing and servicing of seasoned residential mortgage loans, still is quite passionate about HAMP.
That, too, would surprise very few since both supporters and critics continue to argue for or against it.
Slagowitz, however, is nothing short of a full-blown hater who would prefer to avoid having anything to do with the program and wishes he could educate all HAMP borrowers about “the very serious long-term shortcomings” of the program.
“I hate HAMP!” he said at SourceMedia’s 4th Annual Buying & Selling Distressed Mortgage Portfolios forum in New York during a panel discussion about the future of modified mortgage loans in the primary and secondary market.
“Let me repeat it: I hate HAMP! I think it’s a stupid program.”
There are a number of reasons why it does not make any sense, he explained to a cheering audience. “It was a hand-out move that does not solve the problem in the long term.”
Most importantly, he continued, it was based on the assumption that banks would not grant principal reduction modifications, which turned out to be inaccurate.
“HAMP is not good for the borrower so our rule is: Use HAMP only if required, if there’s no escape,” he said, adding jokingly that probably HAMP is great for businesses like his “from the perspective that I’ll still have a job in a few years.”
The biggest HAMP loan problem is
Investors are carefully screening asset values. The redefault risk percentage on a portfolio of residential mortgage loans is a key metric in the HAMP loan market. Another risk factor is data, since it is not always easy to assess borrower behavior after a HAMP resolution.
Buyers are interested in smaller-size portfolios of reperformers with acceptable loan risk levels, Slagowitz said, at the $50 million value range.
Meanwhile, the
According to data collected by Hope Now, the alliance of mortgage servicers, investors, mortgage insurers and nonprofit counselors, by the end of the first quarter permanent loan modifications were slowly taking precedence over short sales and foreclosure sales.
But what appears to be consistent, and for a number of years now, is a trend of considerably higher rates of proprietary modifications than workouts under HAMP.
By February the total number of modifications completed under servicers’ proprietary programs and HAMP since 2007 reached 6.23 million.
Since Hope Now began tracking short sale data in 2009, 1,209,074 short sales have been completed, which is higher than the 1,166,726 HAMP workouts reported during this same period.
In comparison, 5,066,732 homeowners have received proprietary loan modifications since 2007, indicating that mortgage servicers have carried most of the foreclosure prevention burdens since the crisis escalated.
Of the 245,000 loan modifications completed from January through March, about 203,000 were proprietary modifications.
Apparently Slagowitz is not alone in his dislike for the program.
Despite its shortages, however, HAMP has helped millions of homeowners to wait out the foreclosure crisis from the comfort of their own home, and even Slagowitz agrees that is an achievement in the short term.
