Chicago Foreclosure Lawyer Blog

The New York Times is reporting that Bank of America has a new loan modification program in the works. This invite-only program would mostly benefit borrowers who are underwater on their mortgages. As the NYT writes:

Bank of America officials said the maximum reduction would be 30 percent of the value of the loan. They said the program would work this way: A borrower might owe, say, $250,000 on a house whose value has fallen to $200,000. Fifty thousand dollars of that balance would be moved into a special interest-free account.

As long as the owner continued to make payments on the $200,000, $10,000 in the special account would be forgiven each year until either the balance was zero or the housing market had recovered and the borrower once again had positive equity.

This could be a very positive program for many borrowers. It also may indicate that the banks are finally realizing that paying homeowners are better than umpteen empty REOs when it comes to the bottom line. The article also notes that Bank of America is facing significant external pressure in the form of lawsuits and investor rumblings. While this pressure may have also spurred along the development of this new program, the bottom line is that this may be a good thing for distressed home owners. Only time will tell.

The New York Times is reporting that a new Federal program seeks to provide new incentives for borrowers and lenders to resolve distressed mortgages via short sale. The new program, scheduled to take effect on April 4, will provide cash incentives to increase the number of successful short sales.

In a normal short sale, banks allow borrowers to sell their home for less than is owed on the mortgage. In some situations, borrowers are still on the hook for the remainder of the loan's balance. The new Federal program would absolve the borrowers of that deficiency. It would also provide cash payouts to lenders and borrowers.

One key element that may actually make this program work is that lenders will have realtors assess the value of the properties and then be forced to accept an offer that comes in at or over the assessed value. This is a large step forward from the current system where lenders will reject a short sale offer if they subjectively feel that the offer is "too low."

Only time will tell if this is going to be more or less successful than the HAMP loan modification program. At very least, it should keep a few REO properties off of lenders' books.

I've been aware of the legal issues involved in virtual world platforms for quite some time. On the least "worldy" end of the spectrum, you have massively multiplayer online games (MMOGs) like World of Warcraft. Blizzard Entertainment, the company that developed and maintains World of Warcraft has taken many steps to curtail the active secondary market that re-sells in-game currency, items and so called "levelling services," all of which allow players to spend real-world dollars to speed up their advancement within the game itself.

On the other end of the spectrum, you have virtual world platforms like Linden Lab's offering, Second Life. Second Life was a media darling a few years ago, as media outlets caught on the fact that Linden Lab wasn't just running a game client, but was allowing users to monetize their creations, as well as speculate in virtual real estate. Reuters even went so far as to open a "branch" office within Second Life.

A recent article in the Washington Post has me thinking about virtual property again. How is it relevant to our practice at Sulaiman & Associates? More after the jump.

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