Loan servicer writes down mortgages, gets share of future price appreciation
Caplin said SAMs offer consumers the option, long available to corporations, of providing some of the funding in exchange for sharing in the financial risk and rewards. Homebuyers would gain access to a new source of mortgage funding with no concomitant increase in monthly mortgage payments, thereby enhancing housing affordability.
But Caplin has been dismayed by the lack of SAM implementation.
"We are not seeing any traction," he said. "The occasional company does something, but SAM generally falls like a tree in the forest. It is a good idea and it works in this crisis. It worked before the crisis and it will work after the crisis. It is just not something people seem to have an incentive to think about."
The roadblocks are endemic.
First, the government doesn't have its eye on SAM, because it doesn't see it as a winner. Secondly, there might be tax issues that could easily be solved with government regulatory implementation.
"What we need is for Congress to clear out the regulatory structures so that the shared-appreciation mortgage has a simple treatment and everyone can use them easily," Caplin said. "Instead what we can expect is for SAMs to be taxed bizarrely, declared illegal in five states, and regulators will sue the implementers."
Koches is more optimistic. "We think our program can make a real impact on curing the negative-equity problems, and we are working hard to obtain approvals for SAMs in all jurisdictions."
At the time of the Ocwen rollout of its SAM program, in a prepared statement, John Taylor, president and CEO of the National Community Reinvestment Coalition, said, "We hope this innovation inspires other mortgage services to follow suit."
So do I.
Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis," is now available for sale on Amazon.com.
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