“Think it through.”
_____________________________________
It really doesn’t require much thinking – it only requires listening to what mortgage professionals are saying about what is going to happen. Even Rich’s inside man Ramsay reports that loss mitigation is going to take the form of loan modifications with fixed interest rates lower than the exploding Prime/LIBOR + margin recasts that are coming down the pike. The impending recasts are not going to be addressed by a one or two month forebearance, the likes of which we typically see offered due to illness or job loss. Mitigating losses will require longer-term and more sweeping modification programs. It is these types of modifications that we will begin to see more and more of. No one on the inside of the industry is saying anything different on this subject. Of course there will be many borrowers who enter foreclosure – no one is debating that fact – but we are talking about minimizing the carnage by way of loan reworks (not forebearance/short term fixes). I believe we will be seeing extensive loss mitigation and loan reworks for years to come.
