Although mortgage originators quickly exhausted the limited supply of qualified borrowers, that didn't impede them.
Since the borrower has to give up a meaningful share of future home price appreciation, basically establishing a cost for program participation, the shared appreciation modification is not particularly attractive to borrowers that don't need it.
Update: Treasury said it is working to reach as many eligible homeowners as it can and has expanded alternative options for borrowers that do not qualify for the modification program.
That's 7.3 percent of the affected borrowers during the period, a figure that does not mirror the widespread problems regulators said they had identified in the foreclosure system.
(Of course, that doesn't mean borrowers should rush out and get one. We will probably know the fate of the loan sometime next month).
It does point out this caveat, though: "Borrowers from states that did not sign the settlement will not be eligible for any of the relief directly to homeowners".
Such loans, also known as "option A.R.M.'s" or "negative amortization loans," allow borrowers to make payments that don't even cover the interest on the loans, which causes the amount they owe to grow.
It began with mortgage dealers who issued mortgages with terms unfavourable to borrowers, who were often families that did not qualify for ordinary home loans.
Many borrowers are trapped at companies that don't give them basic information, often mislead them, assess unexpected fees, make it hard for them to correct errors and frequently push them into default, the report says.
The collateral backing the downgraded transactions are made up primarily of first-lien, fixed and adjustable-rate, Alt-A mortgage loans, generally loans made to creditworthy borrowers but that do not conform to the standards of the government-sponsored agencies that securitize such debt.
