The mortgage assistance plan is at hand and, as has become the pattern with such programs of late, it is Bigger, Longer and Uncut when compared with the trial balloon proposals that were floating around the rumor mill. Also unsurprisingly, it seems to have found new use for Fannie and Freddie.
The plan will create a new program to help as many as 5 million homeowners refinance conforming loans owned or guaranteed by Fannie Mae and Freddie Mac, according to a fact sheet released by the White House. Treasury will buy up to $200 billion of preferred stock in each of the housing companies, twice as much as previously pledged, the announcement said."It will give millions of families resigned to financial ruin a chance to rebuild," Obama said in remarks prepared for delivery at 10:15 a.m. in Phoenix. "By bringing down the foreclosure rate, it will help to shore up housing prices for everyone."
My favorite part is the incentives structure:
Companies that service mortgages will get $1,000 for each loan that's modified, and as much as $1,000 for three years when the borrower stays current, the government said. Homeowners also are eligible for $1,000 annually for five years for remaining current on their loans, according to the plan.
Now, where is Barney Frank to ask homeowners why they have to be "bribed" to stay current?
Obama Sets $75 Billion Plan to Stem U.S. Foreclosures [Bloomberg]
Earlier: We Thought It Was Absurd Too, But It Turns Out That Obama Really IS Going To Pay Your Mortgage
Posted by guest , Feb 18, 2009 11:08AM
Frosty
Posted by guest , Feb 18, 2009 11:10AM
Retarded. (I know, I'm retardophobic).
Servicers can only do what they're permitted to do under their contract with the party on whose behalf they're servicing.
Offering them money to do something is irrelevant.
It's like me offering you $500 to change the amortization schedule. You can talk to your mortgage company about it, but unless permitted to do so under the terms of your mortgage, you can't do it unilaterally.
Barney Frank is a moron.
Posted by guest , Feb 18, 2009 11:11AM
Im fucking done paying my mortgage.
Posted by guest , Feb 18, 2009 11:11AM
Im fucking done paying my mortgage.
Posted by guest , Feb 18, 2009 11:13AM
So they will go through all this and the mortgagees will re default anyway?
Posted by guest , Feb 18, 2009 11:19AM
Most the of the underwater mortgages will have to be written down.
This is not rocket science folks. Fucking around with the rotten CDOs is a waste of time & and has been one since the dawn of the crash.
Just refinance with 5% fixed with a huge haircut to put equity in the houses.
The soon that happens the sooner we can get past this.
EP: Your comments on bonuses are dumb. Wall Street has fucked up this badly because of the stupid yearly cash bonuses that made otherwise normal people act like crack slingers.
Posted by guest , Feb 18, 2009 11:20AM
Brilliant EP! Well played. This morning, between 6:30-7am, some clown was trying to convince Becky Quick (looks good today BTW) that it was in CNBC's best interest to support the mortgage bail out of irresponsible borrowers.
Quick's retort, "I'm not carrying that bucket of water."
More Quick. More Rebecca Jarvis. More MCC.
Posted by guest , Feb 18, 2009 11:22AM
Trish Regan should stop trying to act like she has a working brain and just read the teleprompter like a good little beauty queen.
Posted by guest , Feb 18, 2009 11:25AM
I cant believe this lady totally nailed it.
http://www.youtube.com/watch?v=P36x8rTb3jI
I am shocked! SHOCKED!
Posted by guest , Feb 18, 2009 11:25AM
How about a provision to speed-up foreclosure on spec purchases (non-owner occupied)? You have to clear those out before this will end.
Posted by guest , Feb 18, 2009 11:25AM
@6 You're an idiot and a moron. Go back to Yahoo or whatever rock you crawled out from under. If the banks take the losses, either A.) They will go out of business and you wont be able to borrow again, or B.) the cost of borrowing will exponentially higher which will only slow down the economy further, or C.) if the Govt takes over the banks, some hack in Washington will be making decisions about credit underwriting and creating gross inefficiencies in the economy. Is that what you want?
Posted by guest , Feb 18, 2009 11:29AM
@11 You moronic moron, what price do you think the fucking banks have the loans their books?
Hint, it's not $1.00 Have you ever hear of mark-to-market?
C & BAC are already insolvent
Posted by guest , Feb 18, 2009 11:31AM
I no longer plan to pay my mortgage until I get my deal.
Politicians, Wall Street CEO's, and Bankers are all idiots, at least this much is certain.
Add to the list:
A-Roid
Greenspan
Geithner
Burris
Blagovich
UAW
nothing will get fixed when it is f#cked
Posted by guest , Feb 18, 2009 11:33AM
remember to file your tax returns come april. frank needs to fund the bribes.
Posted by guest , Feb 18, 2009 11:34AM
I like the last quote about Barney Frank and bribing reckless homeowners to stay current.
Posted by guest , Feb 18, 2009 11:35AM
@ EP: I'm curious. What do you propose to do about the housing issue?
Posted by guest , Feb 18, 2009 11:38AM
This is a good plan. Need to do something and this allows the govt to do something where it can. Clearly not perfect, but a perfect plan doesnt exist. It will help stablize housing prices at the low end which is all we should care about. The high end is toast and will be for some time.
Posted by guest , Feb 18, 2009 11:38AM
@5....Yes
Posted by guest , Feb 18, 2009 11:40AM
We are very close to being done - God help this country.
Posted by guest , Feb 18, 2009 11:40AM
Am reading another site and someone there is claiming it is not $75B but $475B ostensibly saying something about "the fine print"?
Posted by guest , Feb 18, 2009 11:42AM
I can't believe the Gov't is going to cap year-end bonuses at $1000 to those borrowers who participate in the mortgage assistance plan. Capitalism is dead.
Posted by guest , Feb 18, 2009 11:42AM
OK, so here's something interesting. BofA owns Countrywide and has 24.5% combined market share in mortgage origination and servicing. If the gov't incents refis on 5 million mortgages and pays $1K for each restructured, then BofA gets up to $1.25 billion up front plus $1.25 billion annually as part of this program. So this helps the banks earn their way out of the hole.
So maybe nationalization is not the plan -- otherwise gov't would be self-dealing!!
Posted by guest , Feb 18, 2009 11:43AM
Am reading another site and someone there is claiming it is not $75B but $475B ostensibly saying something about "the fine print"?
Posted by guest , Feb 18, 2009 11:44AM
OK, so here's something interesting. BofA owns Countrywide and has 24.5% combined market share in mortgage origination and servicing. If the gov't incents refis on 5 million mortgages and pays $1K for each restructured, then BofA gets up to $1.25 billion up front plus $1.25 billion annually as part of this program. So this helps the banks earn their way out of the hole.
So maybe nationalization is not the plan -- otherwise gov't would be self-dealing!!
Posted by guest , Feb 18, 2009 11:46AM
@12 I HOPE YOU BURN IN H@ll. THE GERMANS ARE MOVING TOWARDS BANK NATIONALIZATION AND THIS IS A REPEAT OF WHAT THEY DID IN THE 1930S. GO BACK TO YOUR CONSPIRACY THEORIES AND BLACK HELICOPTERS IDIOT. IF C & BAC ARE INSOLVENT AS YOU SAY, LET THEM DIE. IF THEY ARE NOT, STOP SPREADING INCORRECT RUMORS. AS IN 1930S GERMANY, THE FIRST STEP IS BANK NATIONALIZATION. THE SECOND STEP IS A THEFT OF PROPERTY RIGHTS. THE THIRD IS BROKEN GLASS!!!
Posted by guest , Feb 18, 2009 11:47AM
@16. Why do you assume anything need be done about the housing issue? If people can't, or won't, pay mortgages, then banks foreclose, the property gets sold at auction, and if it's for 10 cents on the dollar, so be it. Nothing need be done.
You can't "stabilize" housing prices, until they are cheap enough so that somebody wants to buy them, other than Barney Frank and Company.
Posted by guest , Feb 18, 2009 11:50AM
#26, so how come this didn't happen with the CDO's?
Posted by guest , Feb 18, 2009 11:54AM
"If people can't, or won't, pay mortgages, then banks foreclose, the property gets sold at auction, and if it's for 10 cents on the dollar, so be it. Nothing need be done."
So how come this did not apply to the CDO's?
Posted by guest , Feb 18, 2009 11:56AM
@ 25: Where is Dr. Phil when you need him?
Posted by guest , Feb 18, 2009 11:58AM
I heard someone recently say Canada had one of the best managed economies in the world. Why is that?
Posted by guest , Feb 18, 2009 11:59AM
@27, 28. It does apply to CDO's, insofar as the covenants are breached, the breach warrants foreclosure on the underlying securities, and the holder seeks to act. Exactly the same as Joe Six-Pack, who borrowed to buy a condo.
Posted by guest , Feb 18, 2009 11:59AM
Time to default on the ol' mortgage...I want my share of the pie
Posted by guest , Feb 18, 2009 12:01PM
They said Messiah was going to pay our mortgages, and they were right. Jeez, just don't pay the bill for 2 months - how easy is this!
Posted by guest , Feb 18, 2009 12:02PM
Message to the children: Don't work too hard. Don't pay your bills. squat til you get handouts.
Posted by guest , Feb 18, 2009 12:05PM
@25 Take a valium. Not everything ends in a pogrom against the Jews despite what they taught you in Hebrew School. No one with a brain likes nationalization but to draw a direct line from government mischief in the financial system to Kristallnacht ingores so many historical contingencies that you should sue your synagogue for miseducating you. Take a look at Gerald Feldman's book on the Weimar inflation before you get your panties anymore twisted.
Posted by guest , Feb 18, 2009 12:10PM
@ 34
Strive for excellen---err, mediocrity.
Aim for the "A--", err, C.
Screw working hard...what's the incentive if govt's foot is on your back holding you down?
Posted by guest , Feb 18, 2009 12:23PM
This is insane. Bailing out everyone who made bad decisions at expense of the prudent.
I'm done paying my mortgage and my taxes too. I want on the gravy train.
Posted by guest , Feb 18, 2009 12:26PM
@37.. theres not enough room for you on the gravy train.. now shut up and get back to work and pay everyone elses bills
-sarcasm
Posted by guest , Feb 18, 2009 12:35PM
Rework all risky mortgages to make them full recourse. If someone decides not to pay then go after their social security checks. This will cut down most of the crazy behavior and large loans (wages are already garnished for FFELP student loans).
For folks who are too deep underwater, take away all ownership rights and make them renters. Put all the homes in some government fund but give these deadbeats some limited timeframe and then throw them out!
Posted by guest , Feb 18, 2009 12:36PM
Agree with 2 - Servicers are only permitted to perform their duties as they are contractually obligated to. They can however try to modify their responsibilities... I don't think a possible $1,000 per "eligible loan modification meeting" is really enough compensation to cover legal costs and other fees associated to modifying their contractual agreements, nor would it necessarily exceed any servicing advance fees they may collect on foreclosure/REO properties.
Posted by guest , Feb 18, 2009 12:41PM
#37......There's ALWAYS room on the gravy train, if you know how to work the system, that is. Messiah will teach us well.
Posted by guest , Feb 18, 2009 12:46PM
Bring back debtor's prison.
Posted by guest , Feb 18, 2009 12:49PM
The bitching here is hilarious. At a national average of 280k per house, the yearly payment is somewhere around 19k, ignoring taxes, implying that your Ayn Rand Hysterics are focusing on roughly 4.8% of the picture.
I mean really. It's 1k people. I thought you Big Swinging Dicks spent 1k on lunch and pedicures every day.
Posted by guest , Feb 18, 2009 12:55PM
Is it too early to declare the Saviour a failure? Is it? I think I'm going to be bold - and do it. Its done. Failure.
The guy still acts like he's campaigning - and getting short every time he takes the mic has been a 100% trade. Sure is easy to be inspirational when you dont have to actually make decisions behind the bullshit you espouse.
Posted by cy , Feb 18, 2009 12:58PM
27, 28-
This process would be happening with CDO's, except the government refuses to let the people who hold CDO's go bankrupt. Were C to go bankrupt, their positions would be liquidated and we could move forward. However, since everyone seems to think that the earth with be knocked out of its orbit and tumble towards the sun if a major bank goes bankrupt (btw- it wouldn't), we're not getting to see that process take place.
Can someone explain to me why our government is now in the business of making a scarce resource (housing) artificially expensive? Does this strike anyone else as morally bankrupt?? Also, why are we worried about helping homeowners when homeowners are ostensibly richer than non-homeowners? This is reverse robin hoodism, and its disgusting.
Posted by guest , Feb 18, 2009 1:06PM
"The guy still acts like he's campaigning - and getting short every time he takes the mic has been a 100% trade. Sure is easy to be inspirational when you dont have to actually make decisions behind the bullshit you espouse."
Sure is easy to confuse correlation and causation isn't it, you dumb shit!
Posted by guest , Feb 18, 2009 1:10PM
cy @ 45 - the magnitude of the inaccuracies in your post are enormous. where to start?
C going toes-up. Um...did you already forget about lehman and the tailspin that caused? citi has 2x the balance sheet and probably 4x as ensconced.
housing is scarce? tell that to the developers sitting on 300 unit subdivisions with 2 occupied homes. The problem isnt scarcity - its affordability.
richer? i cant even comment.
Posted by guest , Feb 18, 2009 1:17PM
For the clueless who claim "moral hazard" I have to say -- "That's so 2007."
Posted by cy , Feb 18, 2009 1:57PM
47-
Do you really think that "the act" of letting LEH go bankrupt is the cause of the tailspin? Given all we now know about about how terrible many bank's balance sheets were/are, do you think the S&P would still be cruising along at 1200 had a different solution been worked out? It may have been more gradual, but the results would have been the same. I think that after months of people inside LEH saying "everything's fine, everything's fine" until the day of their bankrupcy woke a lot of people up to the fact that "everything may not be fine" at these other places.
What exactly do you think would happen if C went bankrupt (which it already is.)? Mass starvation? LEH went bankrupt, and although we're all financially poorer (as a society) real economy production is only down slightly.
Regarding houses, oversupply can only be a good thing as far as consumers are concerned. I think we have 18 million unoccupied houses on the market. Good! If your developer built 300 houses for which there is no demand, that's his problem. I'd suggest he stop building houses and channel his efforts into doinging something else. I don't mean to be insensitive (although since this is a hypothetical, I don't mind sounding so), but this is how economies work. Getting the gov't to prop up housing prices and provide incentives to homebuilders is the exact opposite of what we should be doing.
Posted by shalimar , Feb 18, 2009 2:04PM
"Companies that service mortgages will get $1,000 for each loan that's modified"
Backdoor way to recap WFC and similar.
Posted by guest , Feb 18, 2009 2:34PM
the govt is standing in the way of affordable housing by artificially keeping home prices over priced
Posted by guest , Feb 18, 2009 2:35PM
"What exactly do you think would happen if C went bankrupt (which it already is.)? Mass starvation?"
A point of order, Mr. Chairman: the US raises a lot of the world's surplus food. If we wreck our economy, our bread will be dearer. The poor will suffer. So yes, people do go hungry when we experience excessive economic disruption.
I personally, being the world's first fully-functioning genocidal artist*, could not care less. But I just thought I would point it out.
*Of the postmodern Rand-Malthus school, naturally.
Posted by guest , Feb 18, 2009 2:58PM
Oh, I dont think things would ok whatsoever. But quite a few things started to come unravel on the back of LEH...think about what happened to STT the days after, the Reserve fund breaking the buck, etc. Citi would be far more disasterous. The notional CDS on Citi have to be upwards of $600bln +.
and i completely agree with you. goes with my comment that affordability is tthe problem i.e., px's need to continue to drop.
Posted by cy , Feb 18, 2009 3:01PM
52-
Maybe you should make a quick list of the great famine's of the modern era and put a check-mark next to those that occured in the context of centrally-planned, command economy. Hmmmm...maybe you can just skip that and give us one (!) example of a famine taking place in a liberal*, free-market society.
*No, not the Nancy Pelosi type of "liberal."
Posted by guest , Feb 18, 2009 3:01PM
@44 Amen.
Posted by guest , Feb 18, 2009 5:16PM
"It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans. It will not help speculators who took risky bets on a rising market and bought homes not to live in but to sell. It will not reward folks who bought homes they knew from the beginning they would never be able to afford."
-the Second Coming
oh, ok. in that case, i'm on board...maybe someone should tell O he's not campaigning anymore, i'm not sure he knows he's actually the president already.
-Jack Donaghy
Posted by DavonP , Apr 14, 2009 2:16AM
Mortgage assistance plan sounds like a great plan. This is one way to solve financial downturns during economic foreclosures. As we can see, foreclosure is becoming epidemic these days. So many thousands of people are losing their jobs, and with the loss of income the rate of foreclosure has been going up. People are losing both their mortgage and their home. If you can do so, then getting a cash advance to stem it off isn't a bad idea. Refinancing, lowering monthly payments and interest can give a bit more breathing room as well. In today's economy, it is most definitely in your best interest to do whatever you can, including getting a cash advance to stem off foreclosure.
http://personalmoneystore.com/moneyblog/2009/04/03/save-house-cash-advance/