A YEAR ago, 49 states and the federal government brought five of the country’s biggest banks to heel. They crafted a nationwide foreclosure settlement that ended a series of abuses, and committed the banks to keeping struggling homeowners off the streets. The settlement is working. But as it takes hold, it’s exposing a huge rift in the housing market. The government’s own mortgage arms, Fannie Mae and Freddie Mac, still won’t meet the same standards the big banks have committed to, and until they do, foreclosures will continue to drag on.
Prior to last year’s settlement, the nation’s biggest banks greeted the foreclosure crisis with indifference. They paid lip service to the notion of helping troubled homeowners, but let homeowner assistance languish while they rushed foreclosures through the system. They signed legal papers they hadn’t read, and they seized homes they didn’t legally own. They treated their own rights as lenders as sacrosanct, but trampled on consumers.
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Which begs the question: Should the government favor those who own homes to this extent? Already getting the mortgage interest deduction.
Loan modification simply delays the necessary clearing of the market and that does nobody any good. If you can't pay your mortgage and your house is underwater, you should pay nothing, save as much money as you can, wait for the bank to foreclose, and then rent. Your credit will be trashed for seven years but life will go on. If you'd done this in 2008 like you should have, you'd be creditworthy again in two years. Most loan mods eventually fail. BTW, McMorrow never mentions the real scandal, the big banks are modifying second mortgages willingly, first liens not so much.
All the banks fault. They grabbed that homeowner's hand and made him sign all 35 pages at closing stating that although he can only afford $1500 a month he will pay $2500. Shame on those banks.
I wish you had explained why Fanny or Freddie writing down loan principal is politically poisonous. Everyone should be playing by the same rules. I'm a little foggy about the details but wasn't it Fanny and Freddie who were at the center of this debacle?
Can I have my principal written down too? This essentially amounts to a huge cash gift to homeowners whose value will recover ten years from now. Say a home was worth 400k when bought, now "worth" 350k. You write down that 50k, but ten years from now the value is 450k. That homeowner just got a 50k gift. Will the money come out of thin air? No, it will be paid for by taxpayers who have worked hard over the past few years to make their payments, or by shareholders who have invested their hard earned dollars. These are people who have spent the past few years working in their communities to make sure they remain desirable places to be, maintaining their home value. They should not be penalized because of the poor judgements of others. Loans absolutely should be refinanced to reduce payments making them more affordable. With my student loans I pay a graduated amount - less now, with payments increasing over time. Why not for mortgages too? PAYMENT REDUCTIONS: YES. PRINCIPAL REDUCTIONS: NO.
why doe fannie and fredd even still exist?? lets get back those huge bonuses they paid out to their corrupt ceos, then shut them down. let the free market work. kick out the deadbeats, despite whatever excuse they give and let the renters who have been saving and doing the moral and right thing, and let them buy these new homes and homes new to the market. pretty simple solution...we are delaying the recovery by all these games and gimmicks...
The world of banking and mortgages. Let's see now the honest banker? Can't think of any I have met. The member of the public who truly understands the mortgage and banking system, credit bundling, bond risks, hmmm, not many. The politics of it. Too funny by half. Rightwingers will try to point to the feds as if the feds are making money. The Dems. will point to the Banks as they bail them out.
The overall discussion. Yawn. Wake me up when folks know what they are talking about.
Free houses for everyone! Unless you have been paying your mortgage, then keep paying so that your mortgage free neighbor can afford to go on vacation now...wealth redistribution only suppresses those struggling to the benefit of those who know where to get the free stuff...
Yup - Yawn. You're the only one who worked hard for their house. The rest of us are all moochers. The black lady in Roxbury or Jacksonville, Fl., the white guy who got had in Orlando, Fl. or Southie. They're just fools and moochers because they got suckered by their broker. That's the way to look at the world you know all about this stuff and everyone else is just mooching off you. Yup, you know how this works. Oh, I used the VA, I know another moocher.
Exactly how did they get suckered? Did they not know how much the mortgage was going to cost them? Did they not know how much they take in?