Senator Chairs Official Senate Judiciary Subcommittee Hearing at Rhode Island Housing
October 28, 2010
Providence, RI – U.S. Senator Sheldon Whitehouse (D-RI) today brought together a panel of local experts and homeowners to discuss the impact of the foreclosure crisis on Rhode Island families and to examine whether bankruptcy court mediation programs can help to keep families in their homes. The participants joined Whitehouse at Rhode Island Housing in Providence for an official field hearing of the Senate Judiciary Committee’s Subcommittee on Administrative Oversight and the Courts, which Whitehouse chairs.
http://whitehouse.senate.gov/newsroom/press/release/?id=2628A837-FF08-4FF1-B3A8-0C2185850808
Senator, just drop the rates!
Thursday, October 28, 2010
Monday, October 25, 2010
Quest for a foreclosure fix
The 10/18/2010 Christian Science Monitor's article, "Quest for a foreclosure fix," listed three options.
"1. Create an all-out refinancing effort.
One approach, advocated by economists Glenn Hubbard and chris Mayer, would be to offer a simple refinance for most US borrowers at today's ultralow mortgage rate (just over 4 percent). ...Under this approach, the low fixed rate would be available to anyone with a loan backed by Fannie Mae, Freddi Mac, or the Federal Housing Administration.
The result would put cash in the pockets of millions of borrowers--quickly and for years to come. That could boost consumer spending and reduce the likelihood of default."
We wrote Chris and said, "skip the refinance, just drop the rate." He wrote back, "Thanks for your note. Unfortunately, Fannie and Freddie have to do a formal refinance in order to reduce payments. I am hopeful we will see some progress."
Thank you for writing back. We can put a man on the moon, but we can't just drop the mortgage rate without the childish hazing called refinance.
Over 30% of the homes in California and over 20% of the homes in Georgia are underwater. The banks get bailed out, but they continue to lean on the home owner (with the regulators cheering them on). At some point borrowers are going to get a bit churlish. Just drop the rates! The time is now. The action is simple.
"1. Create an all-out refinancing effort.
One approach, advocated by economists Glenn Hubbard and chris Mayer, would be to offer a simple refinance for most US borrowers at today's ultralow mortgage rate (just over 4 percent). ...Under this approach, the low fixed rate would be available to anyone with a loan backed by Fannie Mae, Freddi Mac, or the Federal Housing Administration.
The result would put cash in the pockets of millions of borrowers--quickly and for years to come. That could boost consumer spending and reduce the likelihood of default."
We wrote Chris and said, "skip the refinance, just drop the rate." He wrote back, "Thanks for your note. Unfortunately, Fannie and Freddie have to do a formal refinance in order to reduce payments. I am hopeful we will see some progress."
Thank you for writing back. We can put a man on the moon, but we can't just drop the mortgage rate without the childish hazing called refinance.
Over 30% of the homes in California and over 20% of the homes in Georgia are underwater. The banks get bailed out, but they continue to lean on the home owner (with the regulators cheering them on). At some point borrowers are going to get a bit churlish. Just drop the rates! The time is now. The action is simple.
Foreclosure costs
This is the 10/23/2010 Wall Street Journal. Couldn't some of these foreclosures and related costs have been avoided if the lender had just reduced the interest rate?
"Other ways the foreclosure crisis could sting homeowners"
"Other ways the foreclosure crisis could sting homeowners"
The foreclosure mess could hurt homeowners in another way: The costs of buying a home and paying off the mortgage are likely to go up, say housing experts.
The rising costs will come both during the closing and throughout the life of the loan.
At the closing, the cost of title insurance, which protects a property buyer from claims of ownership made by other people, is likely to rise, industry officials say. Title insurance is one of those annoying costs that can sneak up on a buyer during a close; premiums average around $2,000 across states, says Tim Dwyer, CEO of insurer Entitle Direct Group.
The foreclosure mess has sent insurers scrambling. One of the largest, Old Republic Title Insurance, told its agents on Oct. 1 not to issue policies on homes that have been foreclosed by GMAC Mortgage or J.P. Morgan Chase. And on Wednesday, the nation's largest title insurer, Fidelity National Financial, said lenders must vouch for the accuracy of their paperwork before it will insure properties.
Just like homeowners-insurance rates rise after a hurricane, the rates for title insurance are expected to rise, to compensate for the added risk.
The turmoil will likely lead to pricey premiums for new homeowners, says McLean, Va.-based housing economist Tom Lawler. Adds Cameron Finlay, chief economist at mortgage lender LendingTree.com: "Any time there is uncertainty in the market or risk implied, it follows that costs go up."
Other costs could be felt during the life of the loan. Until the current mess, servicing loans was a low-margin, high-volume business. Servicers collect mortgage payments from borrowers and send them off to mortgage holders, and if the loan gets into trouble, they manage the foreclosure. Few doubt this process will get costlier now that it is under scrutiny from regulators and the courts. That higher cost likely will show up in higher interest rates for borrowers.
Both of these higher costs also would hit homeowners who refinance their loans.
How much the costs of buying a home will rise is unknown. Mortgage industry officials say it is too soon to tell. And no one believes the costs will significantly change the price of a home. But with the housing market still weak, the uncertainty is making the prospect of buying—or selling—a home that much dicier.
Thursday, October 21, 2010
I Can Afford My Home With the Right Loan
This is from the Wall Street Journal.
Your editorial "The Housing Mirage" (Aug. 25) reflects a common misconception held by many outside the housing meltdown ground zero regions. You categorize the troubled borrowers as people unable to become "reliable" simply through modifying their home loans, and that efforts focused on keeping people in "homes they can't afford" should be abandoned.
Your editorial "The Housing Mirage" (Aug. 25) reflects a common misconception held by many outside the housing meltdown ground zero regions. You categorize the troubled borrowers as people unable to become "reliable" simply through modifying their home loans, and that efforts focused on keeping people in "homes they can't afford" should be abandoned.
I am one of those "troubled borrowers." My problem is not that I can't afford my home, but that I can't afford my existing 15-year mortgage. I need a 30-year mortgage, but I'm unable to refinance because of my home's decline in value. I could easily afford to buy my home at today's value with a 30-year mortgage at today's interest rates. And the miserable irony is that the next owner of my house, after the foreclosure sale, will receive exactly that deal.
Clearly, the maximum misery of the housing meltdown is concentrated in certain regions of our country, in much the same way natural disasters don't affect everyone. Victims of localized disasters are usually deemed worthy of collective help since, after all, it could have been your state or your zip code where housing values have fallen 50%.
I've been turned down for HAMP modification and see no way of keeping my home.
Tuesday, August 18, 2009
Mortgages & Ethics
“Mortgages aren’t ethical documents, they’re legal contracts. The typical residential mortgage for an owner-occupied home gives the borrower 2 options: pay on time and in full, and keep paper title to the house and full entitlements to any appreciation upon its later sale after the mortgage is satisfied; or stop making payments, and hand the keys back to the lender.
“Morality and ethics don't even enter the equation. Both options are perfectly legal for the borrower, and the only criteria should be business-based. All the ethics you need are contained within the 4 corners of the pages of the mortgage contract.
“Indeed, the ethical thing to do is for each borrower who’s underwater to look without blinders at their family's financial situation -- not just now, but over the long term."
From Mike Shedlock in Minyanville.
A Tishman Speyer-led partnership is in default on debt tied to a large office portfolio in the Washington area. Tishman itself isn't at risk. 8/19/09 Wall Street Journal
“Morality and ethics don't even enter the equation. Both options are perfectly legal for the borrower, and the only criteria should be business-based. All the ethics you need are contained within the 4 corners of the pages of the mortgage contract.
“Indeed, the ethical thing to do is for each borrower who’s underwater to look without blinders at their family's financial situation -- not just now, but over the long term."
From Mike Shedlock in Minyanville.
A Tishman Speyer-led partnership is in default on debt tied to a large office portfolio in the Washington area. Tishman itself isn't at risk. 8/19/09 Wall Street Journal
Tuesday, August 11, 2009
Modification falters
"U.S. Effort to Modify Mortgages Falters
By RUTH SIMON Wall St Journal 7/28/09
"The Obama administration in February laid out its foreclosure-prevention plan to much fanfare.
"One issue was that mortgage companies were waiting for final federal guidelines on key issues such as how to determine whether a loan modification is preferable to a foreclosure, said Mary Coffin, head of loan servicing for Wells Fargo Home Mortgage
"Employees at mortgage-servicing companies often tell borrowers they can't be helped if they are current on their loans, said Michael van Zalingen, director of homeownership services for the nonprofit Neighborhood Housing Services of Chicago.
"Other borrowers complained of long waits for help. Suzanne DeNick of New Jersey said J.P. Morgan Chase & Co. told her it would take four to six weeks for her modification request to be assigned to an analyst and another 90 to 120 days before she received a decision. The company also asked her to resend her application, further delaying the process.
"Mortgage companies say that to be considered at risk of imminent default, borrowers must typically have liquid reserves that amount to less than three months of mortgage-related payments and, after figuring in expenses, a few hundred dollars or less left at the end of each month."
On Cove Street, the interest rate is merely dropped. There are no costs to the borrower. No hassling evaluation by the banks--which is expensive for the banks. Banks can focus on lending. The government is not involved. Borrowers on the borderline are in better shape. Borrowers above the border have more free cash.
By RUTH SIMON Wall St Journal 7/28/09
"The Obama administration in February laid out its foreclosure-prevention plan to much fanfare.
"One issue was that mortgage companies were waiting for final federal guidelines on key issues such as how to determine whether a loan modification is preferable to a foreclosure, said Mary Coffin, head of loan servicing for Wells Fargo Home Mortgage
"Employees at mortgage-servicing companies often tell borrowers they can't be helped if they are current on their loans, said Michael van Zalingen, director of homeownership services for the nonprofit Neighborhood Housing Services of Chicago.
"Other borrowers complained of long waits for help. Suzanne DeNick of New Jersey said J.P. Morgan Chase & Co. told her it would take four to six weeks for her modification request to be assigned to an analyst and another 90 to 120 days before she received a decision. The company also asked her to resend her application, further delaying the process.
"Mortgage companies say that to be considered at risk of imminent default, borrowers must typically have liquid reserves that amount to less than three months of mortgage-related payments and, after figuring in expenses, a few hundred dollars or less left at the end of each month."
On Cove Street, the interest rate is merely dropped. There are no costs to the borrower. No hassling evaluation by the banks--which is expensive for the banks. Banks can focus on lending. The government is not involved. Borrowers on the borderline are in better shape. Borrowers above the border have more free cash.
Sunday, July 5, 2009
Mortgage Rescue II
The 7/2 Wall Street Journal says that our Feds are raising the limits on borrowers. The first program said the refinanced loans couldn't be more than 105% of the new value of the homes. Now these fine folk have said they would consider refinancing the loans they have already made even if (shock) the loan was now 125% of the value of the home. These are loans which the feds already made to borrowers who previously "qualified," living in homes which previously "appraised." Now the feds are thinking they might lower the interest rates if their borrowers can survive the refinance torture chamber and only if they "qualify." The final paragraph says, "Some analysts and regulators who oversee Fannie and Freddie say expanding the program could decrease credit risks to the government-controlled mortgage companies because they already own or guarantee these mortgages; a refinancing to lower monthly payments could make those borrowers less likely to default."
Of course borrowers are less likely to default. Just get on with it and lower all the rates.
Of course borrowers are less likely to default. Just get on with it and lower all the rates.
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