• News
  • Celebrities
  • Finance
  • Crypto
  • Travel
  • Entertainment
  • Health
  • Others

Less Hope for Homeowners

When Congress passed the mortgage rescue bill in July, politicians touted help for homeowners as a big part of the legislation. By Oct. 1, the Federal Housing Admin. was to set up a program that would back, with $300 billion in guarantees, the refinanced loans of homeowners in trouble. Lenders who wanted to participate would take a 10 percent loss on the loan in return for the government guarantee.

Hopes were high for the program as one possible solution to the economic crisis. It was supposed to be a way to slow down the increasing pace of foreclosures.

As Housing Wire reports, some data is now available on the program’s progress so far. It would be fair to say that a celebration hardly is in order.

In its first two weeks, 42 applications were filed for the program. Not a single one was accepted. The problem seems to be with third-party investors in mortgage-backed securities, who won’t take any losses on their investments. From Housing Wire:

The problem, however, may not be lenders, who say they’re more than willing to begin processing the loans. Instead, the problem sits with third-party investors that have thus far proven unwilling to take the minimum 10 percent haircut required to put borrowers into the program, plus an upfront premium payment–losses are actually far greater for investors who participate, given that the 10 percent figure is based on a current appraisal, and not original LTV.

John Sorgenfrei, president of Florida-based Assurance Home Loan, Inc., said he receives calls from eight to 10 borrowers daily about participation in the program. For the time being, he has been forced to make them wait, as no investors so far have bought into the program.

“I wish I could say we have something in the works,” he said. “We’re waiting for the investors to decide whether it’s going to be a third-party participation or just exclusively held for the lenders.”

Robert Paduano, managing director at Allegro Funding Corp., licensed to operate in 24 states and signed up on the H4H list, also said in an interview that the hold-up on the program has resulted from investors unwilling to accept rewrites on existing loans.

“The [H4H] program is a joke,” he said. “It’s not going to materialize into what we had hoped for because most lenders are unable or unwilling to write down the principal balance to 90 percent because their investors won’t let them.”

There’s a growing list of banks trying to do loan modifications, with JPMorgan, Bank of America, and IndyMac among them. And there’s the program being put together by the Treasury Dept. and the Federal Deposit Insurance Corp. All of them rely on the voluntary participation of lenders and investors, and depend on their willingness to take a losses in return for government guarantees.

Judging by the early returns of the FHA program, and the difficulty in getting other loan modifications through, it’s clear that investors are in the driver’s seat — and that they’re not willing to take any hits.

In the middle of a budget battle in the early 1990s, James Carville, President Bill Clinton’s political adviser, once remarked that he hoped to come back in the next life as the bond market, because it was all-powerful. These days the choice might be investors in toxic mortgage-backed securities, unwilling to give up their double-digit returns — and, apparently, far enough removed from the fluttering of bank-owned signs on millions of empty houses where people once tried to carve out a life, to even care.

Discussion & Comments (0)

    Recent Articles

    • Things You Should Know about North America

      Things You Should Know about North America

      Get to know more about North America.

    • Eurovision 2010 Paula Seling Unpredictable Contest

      Eurovision 2010 Paula Seling Unpredictable Contest

      Paula Seling's experience on the Eurovision stage led her to declare that "Eurovision is an unpredictable contest". Which may explain the success of the young Lena from Germany, about whom the predictions before the event did not offer much chances for victory.

    • VIPRow.me - The Best Sports Streaming Website Today

      VIPRow.me - The Best Sports Streaming Website Today

      Have you ever contemplated creating a user-friendly site dedicated to sports-related free live streaming channels?

    • Learn How To Download, Install, And Use The Xnxubd 2022 Frame App

      Learn How To Download, Install, And Use The Xnxubd 2022 Frame App

      XNXUBD 2022 Nvidia users are able to watch thousands of videos and other contents online. XNXUBD 2022 Nvidia New is a piece of software that enables people to watch videos online without having to pay for memberships. On a graphics card, the XNXubd also provides some of the best gaming and virtual reality experiences.

    • Xvideostudio Video Editor Apk Free Download For Pc Full Version In 2022

      Xvideostudio Video Editor Apk Free Download For Pc Full Version In 2022

      A new edition of the Video Editor Apk for xVideostudio.Video Studio has all the latest features, including support for multiple video download formats in HD, FHD, and even 4K resolutions.

    • 9 Best Lotion For Masturbation - Popular Choice For 2022

      9 Best Lotion For Masturbation - Popular Choice For 2022

      Masturbation is a common activity for men and women. It's a natural and risk-free way to explore your body, experience pleasure, and release sexual tension.

    • Reasons Why You Need To Stop Watching Movies From Sflix

      Reasons Why You Need To Stop Watching Movies From Sflix

      Without having to sign up or pay anything, you can watch movies online for free with SFlix. It has more than 10,000 movies and television shows.

    • Coi Leray Mom And Dad's Family History & Wife, Explained

      Coi Leray Mom And Dad's Family History & Wife, Explained

      Coi Leray Collins (born May 11, 1997) is a rapper from the United States. Leray started publishing songs to SoundCloud in 2014, and in 2018 she released her breakthrough track "Huddy" as well as her first mixtape, Everythingcoz.

    • Listen And Download Music On MyFreeMP3 For Free

      Listen And Download Music On MyFreeMP3 For Free

      Are you in a bind and looking for a place to obtain free mp3 songs? Never again will you need to bother, since this article has everything necessary to obtain your solution. Download free music from MyfreeMP3.com, one of the world's most popular websites.