Modifications,Short Sales,Deeds in Lieu,WriteDowns

Second Lien Fall out

Posted on Monday, March 15, 2010

Based on their fourth quarter 2009 filings with the Securities and Exchange Commission (SEC),4 banks own more than $400 billion of the total $1 trillion second lien mortgage market.

BofA $149 billion
Citi $54 billion
JPMorgan $101 billion
Wells Fargo $115 billion.

1/2 of non-agency homeowners with a securitized first mortgage also have a second. Many pay their seconds because payments are lower and creditors more aggressive than firsts.

About 1/2 of at-risk borrowers have a second lien.

Median debt-to-income borrowers modified through HAMP is 59.7%, up to 41% of which can be attributed to second lien payments.

About 25% of homeowners underwater can be helped by reducing second lien debt.

The government program to modify second lien mortgages, 2MP introduced April 29, 2009, is in limbo because banks can't afford the write downs.
Bank of America is the only institution to announce it will implement the program.

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