James Lockhart (FHFA Director) & analysts outline new loan modification plan

[Huckleberry]

James Lockhart (and other industry analysts) just outlined the new loan modification plan for Freddie and Fannie.

Straight from the horses’ mouth…

It appears the structure of the govt. plan is not to give principal reductions (or very limited if so), but to push the unaffordable balance to the back end of the loan through a balloon payment.

They are planning on lowering interest rates (to sub 3%) and extending the loan terms (40 yrs.) to get payments into the 38% debt to income ratio.

But the entire loan is still the responsibility of the loan holder.

It also appears prime loan borrowers may be left out in the cold until banks figure out if they are going to be bailed out by the TARP.

I have a pretty strong feeling this will be the fundamental structure for all loan modification plans from the govt. and big banks.

http://www.cnbc.com/id/15840232?video=925314471

Further analysis here:
http://www.cnbc.com/id/15840232?video=925429126

Here is Mr. Mortgage’s take on it:
http://mrmortgage.ml-implode.com/2008/11/11/fannies-new-big-plan-keeps-borrowers-underwater-in-neg-am-teaser-loans/

[Stu949]

Good info Huckleberry.

The government can’t give away freebies to those who were stupid. The moral hazard is too great.

If they think the number of people who are not paying is substantial now, wait until the people who are scraping by (but still current) say f’ it…

I have no doubt that if they bail out people with no strings, they will just cause more of what they are trying to prevent.

Just like when Hawaii tried state-wide socialized medicine. They said they did not account for the fact that everyone was going to drop their health insurance – they thought that people who could afford their premiums would decide to keep their current plans. Duh, everyone will act in their own self interest. If I don’t have to pay for health insurance, I won’t, even if I have the ability to pay.

If I don’t have to pay my mortgage, as the gov will bail me out, then I won’t. I think the gov realizes they have to be very careful how and who they bailout – and the terms under which they do it.

[Stu949]

Good info Huckleberry.

The government can’t give away freebies to those who were stupid. The moral hazard is too great.

If they think the number of people who are not paying is substantial now, wait until the people who are scraping by (but still current) say f’ it…

I have no doubt that if they bail out people with no strings, they will just cause more of what they are trying to prevent.

Just like when Hawaii tried state-wide socialized medicine. They said they did not account for the fact that everyone was going to drop their health insurance – they thought that people who could afford their premiums would decide to keep their current plans. Duh, everyone will act in their own self interest. If I don’t have to pay for health insurance, I won’t, even if I have the ability to pay.

If I don’t have to pay my mortgage, as the gov will bail me out, then I won’t. I think the gov realizes they have to be very careful how and who they bailout – and the terms under which they do it.

[Stu949]

Good info Huckleberry.

The government can’t give away freebies to those who were stupid. The moral hazard is too great.

If they think the number of people who are not paying is substantial now, wait until the people who are scraping by (but still current) say f’ it…

I have no doubt that if they bail out people with no strings, they will just cause more of what they are trying to prevent.

Just like when Hawaii tried state-wide socialized medicine. They said they did not account for the fact that everyone was going to drop their health insurance – they thought that people who could afford their premiums would decide to keep their current plans. Duh, everyone will act in their own self interest. If I don’t have to pay for health insurance, I won’t, even if I have the ability to pay.

If I don’t have to pay my mortgage, as the gov will bail me out, then I won’t. I think the gov realizes they have to be very careful how and who they bailout – and the terms under which they do it.

[Stu949]

Good info Huckleberry.

The government can’t give away freebies to those who were stupid. The moral hazard is too great.

If they think the number of people who are not paying is substantial now, wait until the people who are scraping by (but still current) say f’ it…

I have no doubt that if they bail out people with no strings, they will just cause more of what they are trying to prevent.

Just like when Hawaii tried state-wide socialized medicine. They said they did not account for the fact that everyone was going to drop their health insurance – they thought that people who could afford their premiums would decide to keep their current plans. Duh, everyone will act in their own self interest. If I don’t have to pay for health insurance, I won’t, even if I have the ability to pay.

If I don’t have to pay my mortgage, as the gov will bail me out, then I won’t. I think the gov realizes they have to be very careful how and who they bailout – and the terms under which they do it.

[Stu949]

Good info Huckleberry.

The government can’t give away freebies to those who were stupid. The moral hazard is too great.

If they think the number of people who are not paying is substantial now, wait until the people who are scraping by (but still current) say f’ it…

I have no doubt that if they bail out people with no strings, they will just cause more of what they are trying to prevent.

Just like when Hawaii tried state-wide socialized medicine. They said they did not account for the fact that everyone was going to drop their health insurance – they thought that people who could afford their premiums would decide to keep their current plans. Duh, everyone will act in their own self interest. If I don’t have to pay for health insurance, I won’t, even if I have the ability to pay.

If I don’t have to pay my mortgage, as the gov will bail me out, then I won’t. I think the gov realizes they have to be very careful how and who they bailout – and the terms under which they do it.

[davelj]

Bottom line: If the government is going to hand out free lunches, there will be great demand for such lunches. And people will go to great lengths to try to get at such free lunches.

[davelj]

Bottom line: If the government is going to hand out free lunches, there will be great demand for such lunches. And people will go to great lengths to try to get at such free lunches.

[davelj]

Bottom line: If the government is going to hand out free lunches, there will be great demand for such lunches. And people will go to great lengths to try to get at such free lunches.

[davelj]

Bottom line: If the government is going to hand out free lunches, there will be great demand for such lunches. And people will go to great lengths to try to get at such free lunches.

[davelj]

Bottom line: If the government is going to hand out free lunches, there will be great demand for such lunches. And people will go to great lengths to try to get at such free lunches.

[Arraya]

Well there is a regular all you can eat buffet on Wall Street. There are lots of free lunches just not for the peasants because the other peasants will get mad. Culturally we seem to accept the blatant theft of the “lords of the manor”.

[Arraya]

Well there is a regular all you can eat buffet on Wall Street. There are lots of free lunches just not for the peasants because the other peasants will get mad. Culturally we seem to accept the blatant theft of the “lords of the manor”.

[Arraya]

Well there is a regular all you can eat buffet on Wall Street. There are lots of free lunches just not for the peasants because the other peasants will get mad. Culturally we seem to accept the blatant theft of the “lords of the manor”.

[Arraya]

Well there is a regular all you can eat buffet on Wall Street. There are lots of free lunches just not for the peasants because the other peasants will get mad. Culturally we seem to accept the blatant theft of the “lords of the manor”.

[Author]

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