Much has been made of the 2% base rate included in the guidelines for the Obama Administration’s Affordable” plan. It’s been well documented that the plan is off to a very slow start estimates of approximately 50,000 loan modifications in process. Less talked about, at least so far, is that the 2% headline interest rate of the plan may be unavailable to most homeowners seeking loan modifications that guidelines.
As the saying goes, “The devil is always in the details” and Making Home Affordable has a detail which goes by the name of the “Net Present Value” test. Many of the mortgages which were the boom in real estate, including those considered to be toxic, were sold to investors on from pension funds, and insurance companies (like AIG). These investors didn’t have the infrastructure or experience payments, prepare statements, etc. so they left the handling of those matters to loan servicers like Saxon Mortgage (now a part of JP Morgan Chase). These servicers interface with the homeowner on all matters, including home loan modifications. For that work, they receive a small percentage off of each of the homeowner’s monthly mortgage checks as their fee.
An unintended consequence of the meltdown in real estate prices and skyrocketing default rates is now a conflict of interest between servicers and the investors that employ them. The foundation conflict is this; with monthly mortgage payments functioning as the lifeline of the servicers, their priority is to keep those payments going. To that end, granting loan modifications, even with drastic cuts in interest rates, better outcome for the servicer than not receiving payments at all and/or having the home go into foreclosure. Aggressive loan modifications which benefit the servicers often hurt the investors by forcing markdowns on value in their portfolio, hence, the conflict of interest.
Having experienced this conflict prior to the unveiling of Making Home Affordable, investor groups insisted that the net present value test be added to the plan to protect A net present value (NPV) calculation works this way:
1) Determine the proposed monthly mortgage payment for the modified loan
2) Calculate the total return in dollars over the life of the loan – monthly payment x 12 months x 30 years = total return
3) Estimate the value of what would sell for at auction
4) The highest number between the total return and the estimated foreclosure determines what action will be taken.
Motivated to keep properties generating monthly payments and out of foreclosure, servicers will negotiate the highest interest rate possible, within the constraints of the plan and what the homeowner can afford, to generate higher fees and to make sure that the net present value test comes out on the side of loan modification. With higher fees and the net present value test driving the negotiations in a loan modification, granting 2% interest rates becomes a very low priority and in some cases a deal killer for the servicers.
You may have a number of questions regarding loan modifications and how they can help you avoid have been all over the news lately. President Obama has passed major, historic legislation giving homeowners loan modifications; the California legislature has also passed legislation promoting loan modifications.
Intellectual property is one of the major types of capital assets. It is usually the result of intellect. It can be either tangible or intangible. Idea, process, and theory are some of the forms of intangible category. Included in the tangible type is product, invention, or any such kind of tangible medium such as discovery, creation, or a specific knowledge.
Based on several factors such as background, intellectual output, dynamic technology, and economic and social interests, intellectual property in Thailand is classified into two sections: Industrial Property and Copyright. Industrial property is again categorized into patent for invention and utility model and design, trade mark, secret, trade name, and appellations of origin.
A member of the World Trade Organization (WTO), Thailand's each intellectual property is unique and has different requirements. Hence, they possess different legal treatments. All of the laws pertaining to the development, promotion, and protection of them are managed by the Department of Intellectual Property (DIP), which in turn is under the control of the Ministry of Commerce of the Kingdom of Thailand.
