rssFor the Government, a Step Forward on Mortgages
Tuesday, November 11, 2008 at 2:34 pm
- 7 Comments
Mortgage giants Fannie Mae and Freddie Mac are going to speed up loan modifications for hundreds of thousands of borrowers, the government announced today.
As we said earlier, some help for homeowners couldn’t come too soon, given all that’s been done for banks, insurance companies, and anyone else with their hands out.
This new effort isn’t as widespread as some housing advocates have been pushing for – it applies only to Fannie and Freddie loans, and there are restrictions on who can qualify – but since the two agencies hold half of all the nation’s mortgages, streamlining modifications is an important move. The government hopes more lenders and servicers will follow suit, the Wall Street Journal says.
I think the most important thing about this latest plan is that it includes paying services to do loan modifications. One holdup in redoing loans has been the lack of financial incentives for servicers, who stand to earn more by foreclosing.
From the Journal:
Servicers are expected to be paid $800 for a successful modification and loan investors are expected to reimburse servicers for certain fees associated with the modification. There will be a 90-day trial period, and if borrowers successfully make payments for those 90 days the modification will be formally approved.
That seems more than fair to me. The government still is working on a more sweeping plan, but this one certainly is a good start, and it’s more help for homeowners than we’ve seen so far.
It’s far too early to call this a trend, and to expect more in the immediate future. But the move pushes forward the slow, incremental progress being made toward more loan modifications, and toward helping more homeowners. Congress passed that $700 billion bailout bill in short order. Helping homeowners clearly is going take longer, with plenty of complications. But it inched ahead a bit more today, and that’s a hopeful sign.
7 Comments
Comment posted November 11, 2008 @ 12:08 pm
We are in an eye of a hurricane; we have been hit with the first wave of the storm. This represents the past, the 700 Billion in foreclosed mortgagees, bad credit swaps and the miss management of the world money supply. This was not a consumer generated recession. This recession was bought on by the financial neglect of banks, Wall Street and the lack regulation of the banking system by the federal government. The money supply has been tainted with infectious money and we are now lining up for the second half of the storm. Now consumer spending has paused and if we don’t act, the second wave of the storm will cause financial chaos and homes like these (i.e. http://www.BuyMyHouseBeforeTheBankTakesIt.com) will fold at record levels.
The real problem is that America is over burdened in debt. Incomes have not increased and America, its businesses and people, need a quick restructuring to create a “continuous” cash flow to ignite spending to support businesses. Without consumer spending, this recession, will quickly turn into to the biggest financial disaster this country has ever seen.
The fastest and most effective way to correct the damage to our economy is to offer low interest loans to consumers to refinance their homes and debt. Credit card companies need to restructure credit card debt into long term low interest non revolving instruments. Mortgage companies need to be able to offer low interest (3 to 4%) 30 year mortgages for refinancing. Once we restructure the debt load and create this continuous cash flow, banks should revert to sound lending practices to prevent this mess in the future.
Once we restructure the debt loads, disposable incomes will be on the rise and spending will commence. The quicker we restructure debt, the faster the economy rebounds. If we don’t restructure debt, bankruptcies will prevail. If I were an investor, I’d rather get 3% back than loose everything.
Comment posted November 11, 2008 @ 12:22 pm
This is more governnment BS, Anything less then a writedown to maket value of these toxic loans in candy coating the problem. When will these idiots come to terms with this problem. Enough with the monkey play and get the people what they need a 30 year fixed loan at market rate and a principal of true market value. Anything else will do nothing to stop this problem from completely putting the US into a deep depresssion.
Comment posted November 12, 2008 @ 9:07 am
Interesting post. There are definitely a lot of issues with mortgages and the economy in general. It's important to stay informed.
Comment posted November 20, 2008 @ 3:02 pm
At least someone is paying to this mortgage situation! Thanks for the info. I will subscribe!
http://www.refinancingcondo.com
Comment posted February 4, 2009 @ 8:32 am
I couldn't have come at a better time. The recession calls for drastic measures and the mortgage industry is not an exception. Thanks
Comment posted February 4, 2009 @ 4:32 pm
I couldn't have come at a better time. The recession calls for drastic measures and the mortgage industry is not an exception. Thanks
Comment posted July 23, 2009 @ 3:56 pm
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