Beware of Southern California Loan Modification Lawyers

This article in the Fresno Bee should give pause to anyone thinking about hiring one of the Southern California loan modification mills. What generally happens is the client sees an internet or other advertisement, calls the number and reaches a call center. They then are asked to put down $1,500 - 5,000 to get a loan modification. Sometimes, a loan modification can be achieved, but oftentimes, the client could have obtained a loan modification without the significant cost incurred. The California State Bar has been actively investigating these cases, providing news releases tracking their progress (See July 15, 2009, August 15, 2009, September 18, 2009, October 21, 2009, and November 10, 2009). The article also notes the following:

The loss to the public from loan-modification cases is in the millions of dollars, State Bar officials say. Most of the attorneys under investigation are from Southern California, but many of the victims live in the central San Joaquin Valley, enticed by loan-modification companies that advertised on the Internet.

I have seen that happen time and time again. I have also seen similar lawyers from Southern California try to represent clients in Bankruptcy Court in Fresno and they almost always make a mess of the case, especially in Chapter 13. If you are thinking about filing a bankruptcy, hire a local lawyer.

Major Asset Manager Proposes Allowing Mortgage Modifications in Bankruptcy

BlackRock, the world's largest asset manager, has proposed creating a bankruptcy option that allows modification of home loans in bankruptcy. Interestingly, BlackRock is not proposing that it be done in Chapter 13, but rather through some other bankruptcy route that allows all of the unsecured debt to be discharged so that home owners can focus on making the new payment on their mortgage. I think that Chapter 13 is still the best place for allowing loan modifications, especially in districts where there is no set minimum that has to be paid to unsecured creditors. Chapter 13 trustees, debtors' attorneys, creditors' attorneys and bankruptcy judges are the best-equipped people to handle these types of modifications, because they do it every day with every other type of collateral.

The Real Message of the Massachusetts Senate Election

Everyone is trying to figure out the meaning behind Republican Scott Brown's mind-numbing 5-point victory to fill Teddy Kennedy's seat in the U.S. Senate. Most people think it has something to do with the health care legislation, and I would agree with that. I think people don't believe that government can actually keep health care costs down. But I think the real issue is that people are so upset the health care bill has taken up almost a year of legislative work, when the big issue is the economy and legislative action on the economy has been either non-existent or completely ineffectual. Instead of wasting all this time on health care, why don't you put your heads together to come up with some economic reforms, voters are saying.

I think Congress thought they had done somethink like that with the stimulus and loan modification program passed early in the year. But neither of those programs have done anything to put a dent in the economic situation. The stimulus is a pork-laden and bureacratically-entangled mess, which is incredibly inefficient at getting money back into the economy. And the loan modification program has proven a collosal failure. Only a small percentage of the estimated loan modifications have taken place. President Obama indicated he wanted to use a carrot and stick approach to loan modifications. Well, Mr. President, we have tried the carrot and it has not worked. Its time for the stick.

It is time to look again at legislation allowing modification of home loans in Chapter 13 bankruptcy. You can modify car loans, boat loans, rental loans, farm loans, and just about any other kind of loans. But you can't modify a loan on the principal residence of the debtor. It is time to remove that favored treatment to let people keep their houses. This will stave off the next foreclosure wave that everyone is so nervously talking about, and the deleterious effect on home prices from the shadow inventory of foreclosed homes banks are holding, and allow the market to stabilize.

As I have discussed in numerous posts (see, e.g., one, two, and three), dealing with this problem in bankruptcy is the best place to do it for the following reasons:

1. Bankruptcy is a last resort. Nobody wants to file bankruptcy. So only those who are most desparate for the relief will file, thus limiting the number of people taking advantage of this relief.
2. Bankruptcy provides a built-in mechanism to determine if people should be eligible for the relief of modifying the loan. There is no better mechanism out there for determining what people should qualify for a modified loan.
3. All of these modifications would be supervised by the bankruptcy court. The bankruptcy court is pre-equipped with the knowledge and resources to properly vet requests to modify loans. The bankruptcy court does it all the time in contexts other than home loans. (And in Chapter 12, it even supervises modification of home loans.)
4. A Chapter 13 plan takes a lot of doing to finish. Debtors would have to comply with every provision and make every payment on time for 5 years to get the relief of a modified loan. Anything else would result in dismissal of the case and vitiation of the relief requested.
5. Almost all of the mortgages in this country are held in trusts. Each of these trusts has a whole panoply of parties responsible for various aspects of the mortgage, many of which have conflicting interests. Often, the various parties to the trust don't want to act for fear of being sued or don't want to act in a way that is in the interest of the investors because that is against that parties' interest. By allowing mortgages to be modified in Chapter 13, these sticky conflicts are avoided and the Bankruptcy Code can accomplish what it was intended to do: give the debtor a fresh start and treat all creditors fairly.
6. These trusts are known as REMIC trusts and are given special tax treatment. That tax treatment can be threatened if too many of the mortgages are modified.

And the best part about this solution is that it should be inherently palatable to both sides of the aisle. It is inherently free-market because it removes special protections for certain types of loans and would result in little, if any, increased government expenditure or regulation. It is also inherently populist, because it helps the little guy by giving him the same rights to modify a loan in a small bankruptcy that a big corporation has in Chapter 11. It is time to allow home loan modification in Chapter 13 bankruptcy.

The Problem of Loan Modification Assistance Providers

Clients and acquaintances often ask me if I can refer them to someone who can help get a loan modification. Unfortunately, I can't. I don't know of anyone who is going to do any better of a job than the client could do working directly with the lender. So I usually suggest that clients try to negotiate directly with the lender to obtain a loan modification. Almost all loan modifications now are done through the HAMP program, so I put together an article on the HAMP program that gives a basic framework of how that program works.
Recently, I noticed a press release from the State Bar identifying various loan modifications that were under investigation. (The release is dated 9/18/09.) I don't know what the current status of this investigation is, but I would highly suggest that individuals in California considering using a loan modification law firm contact the California State Bar to see if there have been any complaints regarding the firm they propose to use.

Personal Bankruptcy Filings Rising Fast - WSJ.com

This is an interesting article from the Wall Street Journal entitled, "Personal Bankruptcy Filings Rising Fast." The article states that in 2009 there was a 32% rise in bankruptcies over 2008. The question is, will this trend continue in 2010? Only time will tell, but I am inclined to think that it will level off a little bit in 2010. In the article, they state that bankruptcies had peaked, which is probably accurate. But I would not be surprised if they stayed close to that peak for quite some time to come.

Citi decides not to play Scrooge for the holidays, but in January all bets are off

Trying to repair an image that is pretty bad right now, Citi has decided not to pursue foreclosures for the Christmas holidays. But, because life does go on, they will start back up again in January. Citi estimates this will benefit about 2,000 homeowners, albeit temporarily. What if Citi got some real Christmas cheer and looked seriously at some of the 100,000 loan modification requests they have received? That would be something. Unfortunately, Citi has only modified 270 of those loans. Think about that--a 2.7% loan modification rate. That is pretty bad and brings us back to the point discussed on this blog many times: the only way lenders will make serious changes to their loan modification process is if Congress allows mortgages to be modified in Chapter 13 bankruptcy. Will it happen? Only time will tell.

AB 1046 Signed by Governor - $25,000 Increased Homestead Exemption

The Governor signed AB 1046 (click here for history) on October 11. The bill increases the homestead exemption by $25,000. The full bill can be found here. The homestead exemption is increased to $75,000 for an individual debtor, $100,000 for debtor who is member of a family unit, and $175,000 for debtors 65 and over and disabled debtors. The bill takes effect on January 1, 2010.

COP: HAMP Not Enough; Chapter 13 Mortgage Modification Needed

The Congressional Oversight Panel appointed to oversee the Home Affordability Modification Program (HAMP) has put out a very interesting 6-month report on the effectiveness of HAMP. The report first analyzes the current market and what has happened to date.

The report notes that the crisis has come in waves. The first was driven by speculators abandoning homes when the prices started falling. This drove the prices even lower and brought about the second wave with Option ARMs and other exotic mortgages resetting, homeowners were unable to refinance and faced the choice of whether or not to let the house go because they could not refinance to an affordable payment.

The next wave has been a little more subtle but has continued to grow unabated and is now the dominant factor in the residential market: negative equity. Life changes sometimes force relocation and debtors do not have the option of staying in a particular house. If the house has positive equity, it is easy to sell the house. But, if the house has no equity, it must either be foreclosed upon or sold at a short sale. Foreclosures and short sales almost always result in lower sales prices than market sales. Thus, market values have been driven lower and lower forcing more and more people into the negative equity situation and the cycle perpetuates itself. In California, approximately 35% of all homeowners have no equity in their home. In Nevada, approximately 60% of all homeowners have no equity. The negative equity loop was described as follows:

Homeowners with negative equity are also constrained in their ability to move, absent abandoning the house to foreclosure. There is a wide range of inevitable life events that necessitate moves: the birth of children, illness, death, divorce, retirement, job loss, and new jobs. When one of these life events occurs, if a homeowner has negative equity, the primary choices are between forgoing the move, finding the cash to make up the negative equity, or losing the house in foreclosure. Many have chosen the foreclosure route.

Unfortunately, as the Panel has previously observed, foreclosures push down the prices of nearby properties, which can in turn result in negative equity that begets more defaults and foreclosures.21 A negative feedback loop can develop between foreclosures and negative equity. To the extent that negative equity alone may produce foreclosures, progress in addressing loan affordability will have a limited impact on foreclosure rates over the long term.

The Panel noted that the only way to stop the negative equity foreclosure loop is to make a way for a substantial number of borrowers to fix their negative equity problem. HAMP currently provides an option for lenders to reduce principal balance to solve the negative equity problem, but lenders are almost never taking advantage of that option. One option would be to mandate principal reductions under HAMP, but the Panel noted this would create a perverse incentive for borrowers because there was little cost to the borrower to get the principal write-down. The Panel then noted that Chapter 13 revision might be the way to resolve that issue by authorizing mortgage modification in Chapter 13. That would involve significant cost to the borrower due to the rigor and negative credit effect of going through bankruptcy, but would allow a significant amount of principal reduction that would help to stabilize values. The Panel said:

Negative equity can only be eliminated through principal write-downs, but this raises a number of difficult and complex issues. When principal is written down, it impairs the balance sheets of the owners of the mortgages. In many cases, this means the impairment of the balance sheets of the very financial institutions whose stability is an essential goal of the EESA. To be sure, if principal write-downs actually increase the true value of the loans, by reducing redefault rates, then principal write-downs might cause more immediate losses, but they would produce more realistic, and therefore more confidence-inspiring, balance sheets.

One concern related to the idea of principal reduction is the incentives it may create. Witnesses at the Panel‟s foreclosure mitigation field hearing were asked about this matter. Dr. Paul Willen, Senior Economist at the Federal Reserve Bank of Boston, testified that the “problem with negative equity is basically that borrowers can‟t respond to life events.” Borrowers with positive equity simply have “lots of different ways they can refinance, they can sell, they can get out of the transaction.”330 He noted that although most borrowers with negative equity are likely to make their payments in the present or over the next couple of years, they still remain “at-risk homeowners” and may face more serious issues several years down the road should a life changing event, such as unemployment, occur.331 In that sense, Dr. Willen offered that principal reduction may have some virtue. He also noted, however, that most borrowers with negative equity make their mortgage payments, and that if principal reduction is provided as an option, one runs the risk of incentivizing borrowers, who would otherwise continue to make their mortgage payments, “to look for relief” even when it is not necessarily needed.332 In this sense, according to Dr. Willen, mandating a principal reduction option under HAMP could put additional pressures on the program, and ultimately reduce its overall effectiveness. However, in response to a question from the Panel, Dr. Willen agreed that revising bankruptcy laws to permit principal modification was a clear way to address the idea that there should be a cost for receiving a principal reduction.

Other witnesses at the hearing also argued that the incentive “to look for relief” may be reduced if the costs to the borrower of opting for principal reduction were significantly greater.333 For example, revising Chapter 13 bankruptcy to include a cramdown or a principal reduction component could be one way to impose more significant costs. Because of these costs, such a revision could provide borrowers with the option of principal reduction without creating the potential perverse incentives to other borrowers that may occur by mandating principal reduction as an option under HAMP. Filing for bankruptcy is not an appealing choice to any borrower; however, to the borrower facing certain foreclosure it may be the only choice. Whereas mandating principal reduction as an option under HAMP may attract a larger than desired group of borrowers, allowing principal reduction as an option under Chapter 13 is more likely to attract only those borrowers who are truly in need of such assistance. In this sense, Chapter 13 bankruptcy could be used as a tool to employ the benefits of principal reduction to borrowers in need without attracting other borrowers and putting any additional pressures on HAMP.

I think this makes a great deal of sense and that Chapter 13 mortgage modification could help to stabilize home values.

Where’s the note, who’s the holder: Enforcement of the promissory note secured by real estate | LoanWorkout.org

This is a very good article about finding a note holder for a real estate loan: Where’s the note, who’s the holder: Enforcement of the promissory note secured by real estate. It was written by Hon. Samuel Bufford out of the Central District of California. The article has some good information on standing:

Often, the servicing agent for the loan will appear to enforce the note. Assume that the servicing agent states that it is the authorized agent of the note holder, which is “Trust Number 99.” The servicing agent is certainly a party in interest, since a party in interest in a bankruptcy court is a very broad term or concept. See, e.g., Greer v. O’Dell, 305 F.3d 1297, 1302-03 (11th Cir. 2002). However, the servicing agent may not have standing: “Federal Courts have only the power authorized by Article III of the Constitutions and the statutes enacted by Congress pursuant thereto. … [A] plaintiff must have Constitutional standing in order for a federal court to have jurisdiction.” In re Foreclosure Cases, 521 F.Supp. 3d 650, 653 (S.D. Ohio, 2007) (citations omitted).

Also, some very good information on MERS:

For those of you who are not familiar with the entity known as MERS, a frequent participant in these foreclosure proceedings:

MERS is the “Mortgage Electronic Registration System, Inc. “MERS is a mortgage banking ‘utility’ that registers mortgage loans in a book entry system so that … real estate loans can be bought, sold and securitized, just like Wall Street’s book entry utility for stocks and bonds is the Depository Trust and Clearinghouse.” Bastian, “Foreclosure Forms”, State. Bar of Texas 17th Annual Advanced Real Estate Drafting Course, March 9-10, 2007, Dallas, Texas. MERS is enormous. It originates thousands of loans daily and is the mortgagee of record for at least 40 million mortgages and other security documents. Id.

MERS acts as agent for the owner of the note. Its authority to act should be shown by an agency agreement. Of course, if the owner is unknown, MERS cannot show that it is an authorized agent of the owner.

9th Cir BAP - "NO" to Stripped Mortgage and Surrendered Property Deductions on the Chapter 13 Means Test

The Ninth Circuit BAP ruled in two cases, In re Martinez and In re Smith, that Chapter 13 debtors may not take deductions for payments on stripped mortgages and surrendered property, respectively. They relied heavily on the "reasonable and necessary" language of 1325(b)(2), finding that the application of the means test as stated in (b)(3) was limited by the reasonable and necessary language in (b)(2).

Links:

http://www.fresnobklaw.com/Uploads/Martinez.pdf
http://www.fresnobklaw.com/Uploads/Smith.pdf

More analysis to come . . .

Elizabeth Warren Makes Timmy Geithner Squirm Over AIG and Goldman Sachs Bailouts

This is a very interesting video in which Elizabeth Warren Makes Timmy Geithner Squirm Over AIG and Goldman Sachs Bailouts.

Wells Fargo Exec - "We know we've fallen short of our customer service goals . . ."

Now there is the understatement of the year. In this article on The Business Journal, online version, Mike Heid, co-president of Wells Fargo's mortgage unit is quoted as saying, "We know we've fallen short of our customer service goals in some cases." The reason? Wells Fargo has only modified six percent (6%) of eligible loans under the HAMP program.

By comparison, Chase had modified 20% and Citigroup 15%. On the other end of the spectrum, Bank of America had only modified four percent (4%).

"We think they could have ramped up better, faster, more consistently and done a better job serving borrowers and bringing stabilization to the broader mortgage markets and economy," said Michael Barr, the Treasury Department's assistant secretary for financial institutions. "We expect them to do more."

Possibly. But these lenders have to add and train staff. That takes money and time and servicers are getting compensated very little for doing these modifications. The better resolution would have been to allow modifications in Chapter 13 bankruptcy. That would have required very little additional investment by servicers, but would have made it readily available to the most needy borrowers.

The lending industry is asking for patience, saying the industry needed time to implement the program.

Very interesting. Will these same lenders exercise patience waiting for borrowers to make unmanageable payments because the lender does not have the staff to process the loan modification? Call me synical, but I doubt it.

Are Foreclosures in Lenders' Best Interest?

Foreclosures Are Often In Lenders' Best Interest says a story from the Washington Post. But are they really?

But a study released last month by the Federal Reserve Bank of Boston was downbeat on the prospects for widespread modifications. The analysis, which looked at the performance of loans in 2007 and 2008, found that lenders lowered the monthly payments of only 3 percent of delinquent borrowers, those who had missed at least two payments. Lenders tried to avoid modifying the loans of borrowers who could 'self-cure,' or catch up on their payments without help, and those who would fall behind again even after receiving help, the study found.

The article goes on to quote industry insiders saying, essentially, "ergo, loan modifications don't make sense for lenders." That conclusion doesn't make a whole lot of sense itself. The reason that not a lot of loan modifications are being done is that not a lot of loan modifications offered by mortgage servicers make sense for borrowers. Most of the modifications don't actually decrease the cost of the loan very much and even in those that do, the total amount of debt on the property is still often $100,000 to $150,000 more than the property is worth, with no hope in sight (or 10 to 15 years, at least) for the property values to eclipse the loan amount.

The question I am asking myself constantly is "why aren't servicers doing more reasonable loan modifications?" I think there may be several reasons:

1. The old problem of who is really in charge with all of the mortgage backed securities and the conflicting interests of trustees, servicers, and bondholders in the trust. Servicers are the one's really calling the shots and it doesn't make a whole lot of financial sense for them to invest a lot in doing voluntary loan modifications, because they don't make a ton that way and open themselves to possible litigation if they do too many modifications.

2. I think that the financial services may be leery of doing too many modifications because it might encourage people who can actually pay the mortgage to ask for a modification. And they want those who can actually pay to keep paying the mortgage. If servicers had to rewrite everyone's loan that was underwater, half the mortgages in the country would probably have to be rewritten. I think they may want to keep these to a minimum, with no one getting a decent modification so that they don't go tell their friends what a great deal they got.

3. Probably most important--they don't have to. Because the prospect of modifying home mortgages in bankruptcy is now dead (at least for the time being), mortgage servicers can do whatever they want.

All of these problems create a real frustration for those watching homeowners who could afford a reasonable payment get washed out in the foreclosure deluge. I had a homeowner talk to me the other day who had worked out a loan modification with one of the larger mortgage servicers. Shortly thereafter, however, the loan was sold to another entity (of dubious distinction) that is insisting they will take nothing other than payment in full or they will foreclose and that they will not honor the servicers commitment to modify the mortgage. And there is little this person can do about it. The mortgage servicers hold all the cards.

Good Article from WSJ.com Regarding Benefits of Bankruptcy

This is a good article from the Wall Street Journal regarding filing for bankruptcy. A few important excerpts from the article:

There's a surge in personal bankruptcy filings at the moment, for obvious reasons. Some 30,000 Americans are filing each week, and the figures could top 1.4 million for the year.

But too many people are talking about bankruptcy as if it's a sign this country's social safety net has failed.

It isn't. Bankruptcy is part of the safety net. Other countries have welfare states, America has bankruptcy.

And some additional good advice:

Every middle class family should be aware of the risks of bankruptcy, and how to protect their assets if the sky falls.

Bankruptcy laws are complex and vary from state to state – if you want to make substantial plans you should probably talk with a lawyer in your state who specializes in the subject.

NBI | Nuts and Bolts of Bankruptcy Law | Live Seminar

Mr. Fear will be speaking at a Nuts and Bolts of Bankruptcy Law seminar sponsored by the National Business Institute on August 5, 2009.

Foreclosure rates up in Fresno

The Business Journal is reporting that foreclosure rates in Fresno are up from 2.1% of all single family residences in foreclosure last year at this time to 3.5% this year. That is an increase of 67% over last year's historically high foreclosures.

The interesting thing about this statistic is that a lot of mortgage companies are actually delaying foreclosures in some cases because they don't have the capacity to liquidate all of the properties and they don't want the liability of dealing with a lot of property on their hands. Consequently, I often have clients who want to surrender a property to the creditor where it will take 6 or even 12 months before the mortgage company will start the foreclosure process. Then, it takes another 6 months or so to complete the process. These numbers could be a lot higher.

1 out of 8 U.S. Homeowners in foreclosure or late on mortgage payments

Reuters is reporting that 1 out of every 8 homeowners (approximately 12% of homeowners) in the United States is late on mortgage payments or in the foreclosure process. That is a staggering statistic. In California, the problem is worse than the nation as a whole, so the number is probably even higher for California. I think we are close to where the bottom for home prices should be (based mostly on income ratios), but due to all of these foreclosures, I think home prices are going to continue to drop to a number lower than what prices should be. For people with cash (and maybe first-time home buyers who can get a loan), that will be an opportune time to buy. Everyone else is in for a difficult ride.

New York Bankruptcy Court: Debtors and Chapter 13 Trustees Should Object to Stale Proofs of Claim

One issue that frequently comes up in bankruptcy cases is the filing of "stale" (i.e., beyond the statute of limitations) claims. What happens is that debt buyers, such as LVNV, purchase a large volume of debt at pennies on the dollar. When a debtor files a Chapter 13 bankruptcy, they attempt to collect on that debt by filing a proof of claim. The debt, however, may be 10 years old and the debt collector could not have pursued the claim in state court. Confronting this issue, a bankruptcy court in the Southern District of New York had the following to say:

C. Debtors and Their Counsel, If They Are Represented, and the Chapter 13 Trustee Should Scrutinize and Object to Stale Claims

In most circumstances it would be enough for the Court to stop with its ruling sustaining the objections and expunging the claims. But these claims and objections highlight a larger problem for this and other bankruptcy courts across the country. Two of the three claims at issue here were filed by LVNV, one of numerous bulk-claims purchasers that regularly file stale claims in bankruptcy courts. As stated in In re Andrews, 394 B.R. at 387, “[t]he phenomena of bulk debt purchasing has proliferated and the uncontrolled practice of filing claims with minimal or no review is a new development that presents a challenge for the bankruptcy system.”

While agreeing that the practice of bulk-claims purchasers filing stale claims is a serious problem, the court rejected the debtor’s argument that the conduct was sanctionable, as had other courts before it. Id. (citing cases). As pointed out in Andrews:

Allowing claims based on unchallenged proofs of claim is efficient
and economical in most cases. However, requiring debtors to file
objections and to raise affirmative defenses to large numbers of stale
claims filed by assignees based on a business model rather than after
careful review and evaluation is both burdensome and expensive.

Id. The solution suggested by the court was rules amendments:

The court will ask the Advisory Committee on Bankruptcy Rules
to consider whether changes should be made to the Federal Rules of
Bankruptcy Procedure and to the Official Bankruptcy Forms to alleviate
the significant burden on individual debtors and on the bankruptcy system
caused by the large number of undocumented, stale claims being filed by
the bulk purchasers of charged-off debts. . . . Finally, because the federal
rule-making process typically takes no less than three years to produce a
new rule, this issue will also be referred, with the consent of the two other
judges of this district, to the Local Rules Committee . . . .

Id. at 389.

Unless and until local or national rules changes are made, it is incumbent on debtors, their counsel, and the Chapter 13 Trustee, carefully to scrutinize proofs of claims to identify and object, if appropriate, to stale claims. The Chapter 13 Trustee clearly has standing under Bankruptcy Code § 1302(b)(3) to object to stale claims. See Overbaugh v. Household Bank N.A. (In re Overbaugh), 559 F.3d 125, 129 (2d Cir. 2009). Particularly in cases with pro se debtors, the Chapter 13 Trustee plays a crucial role and has an important responsibility in assuring that only proper claims are allowed and paid from the debtor’s estate.

In re Hess, --- B.R. ----, 2009 WL 1285296 (Bkrtcy.S.D.N.Y. May 06, 2009).

How Do I Modify My Home Mortgage?

One question I get almost every day is "how do I modify my home mortgage?" This website, Making Home Affordable, is good place to start. It describes the Home Affordable Modification Program and has links to all of the servicers who have signed up under the program. Most of the servicers have some information as to what is needed. Hopefully, this program will provide the necessary motivation for servicers to make reasonable loan modifications.

Mortgage Modification in Chapter 13 Unlikely

Well, it looks like Chapter 13 Mortgage Modification is dead for now. (See House Likely to Pass Housing Bill This Week Without ‘Cramdown’.) This is unfortunate, because getting voluntary modifications from servicers has been well-nigh impossible. The new administration wanted to use a carrot and stick approach to loan modifications. They got the carrot, but no stick. Without the stick, I think loan modifications are going to be increasingly rare--everybody talks about them, but no one has ever seen one. (I have actually seen them, but they are few and far between and I have only seen one that really made sense for the debtor.)