Little Hope Seen For Mortgage Holders
Feb 16th, 2008 @ 2:56 PM by Alden Smith
California, always aggressive when it comes to holding people accountable and to be forward thinking in what transpires there, has been working to pass bill pass HR 3609, which would give holders of sub prime mortgages the same opportunity to have the courts change bankruptcy laws to modify mortgages as given to owners of family farms, commercial real estate, and even yachts. There is no reason why this bill shouldn’t pass, especially in light of what has happened in the market.
There really is no cure. The Bush Administration is now touting Project Lifeline, but it will basically have little effect due to stringent conditions under which people would get help. Much like HopeNow, which I reported on earlier this year, Project Lifeline has six major lenders who have agreed to a 30-day halt in foreclosures for some delinquent borrowers. The keyword here is “some.” The plan requires no loan modification, and a short moratorium only puts off the problem.
Right now, there are a lot of people looking at foreclosure. In early December of 2007, there were 2.2 million homes facing foreclosure. Many more than that is expected this year, when loans made in 2005 and 2006 face reset. In late 2007, Moody’s Investor Service reported that loan servicers had only renegotiated 3.5 percent of mortgages resetting at higher rates.
It seems to me too little too late. No one can ever change this issue until the originating lenders are taken to account, and transparency is standard throughout the industry. None of these loans that are eating people alive would be happening if that had been the instance in the first place. As much as I hate Big Brother and all that entails, there has to be such a thing as accountability. If the lending industry continues to offer teaser rates and all the things that go along with that, we will see people who are desperate to won their own homes making the same foolish mistakes. I’m all for people having their own home. But I certainly am not by any circumstances glad to see people duped in the name of profit. If these loans hadn’t have been originated in the first place, then we would not be where we are now. And that, folks, is the bottom line.