Sandy puts banks in a tough spot on mortgages
Does it sometimes seem that banks are caught in the middle these days?
Consider the mortgage market in states hit hard by Sandy. On one hand, officials including New York Governor Andrew Cuomo have issued warnings that make clear that banks should not even think about delaying the mortgage modification requests that were in the pipeline when the storm hit. Cuomo said any delays will likely result in various violations of the $25 billion settlement that the top five banks reached with regulators in February.
At the same time, the big housing GSEs and federal agencies are mandating more time for foreclosure activities to wind through the system. Fannie Mae and Freddie Mac have suspended foreclosure sales and evictions for 90 days for guaranteed borrowers in areas hit by Sandy. The GSEs will also allow mortgage servicers to provide additional payment relief for some up to one year.
The latest news is that HUD is getting in on the act. It has also placed a 90 moratorium on foreclosure activity in some areas. As fate would have it, foreclosure activity in three Sandy-hit states--New York, New Jersey and Connecticut--had soared just before the storm hit.
The bottom line is that foreclosure activity will stall for some time, and that will drag out the economic recovery. As for banks, they'll need to do what it takes to keep the modification efforts humming.
- here's an article on HUD from bizjournals