Ever since I heard Dr. Susan Wachter of Wharton talk about the problems our economy will face in 2010 when HEL loans need to be refinanced. I have been contemplating our current economic problems with foreclosures and falling home prices. The news reported recently of CitiBank’s acceptance of a proposal to allow bankruptcy judges the ability to modify payments; the problem is that this is just one lender, and it requires a case by case review by bankruptcy judges.
A proposal called the Mortgage Equity Protection Plan is for a program that is more streamlined (using the internet), not needing all the paperwork or expense of a conventional bankruptcy, not needing to have each case reviewed by a bankruptcy judge; it takes advantage of current low fixed rates and gives all the loan servicers (& lenders) the incentive to address current and future defaults. (I assume you are familiar with the problem that Loan Servicers face in renegotiating mortgages, on behalf of their investors of Mortgage backed securities).
Most importantly, the plan would almost instantaneously end the massive numbers of homes entering the foreclosure market for the next 5 years. From a populist point of view, it would sell well, as it would be directed to helping homeowners, instead of giving it to banks (hoping they will start lending again). Meanwhile the investors who are being paid from this program, can invest again in FNMA (government backed) mortgage securities. Investors have an incentive to put their money back into this market, because the plan would solve the problem of decreasing prices, and FNMA offers better returns than Treasury notes. Another reason that this will appeal to politicians and pundits, is that these investors will not be using the money to pay executive bonuses or buy other banks,
The Mortgage Equity Protection Program meets another goal of fiscal responsibility (i.e. getting the Treasury repaid).
This plan comes from my years of experience in the Real Estate industry and my work at Mortgage Reporting Service, a consumer service that published mortgage rates for all the lenders in the Philadelphia area in the 1980’s.
I am concerned that if we don’t stop the drop in home prices now, they are going to crater to absurd levels!
The best way to stop foreclosures and modify mortgates is to foreclose on all the people not paying their mortgage. Once you do that, you won’t need to foreclose anymore.
Also, the loan gets modified such that the new loan belongs to someone more reliable and solvent.
The best way to stop foreclosures and modify mortgates is to foreclose on all the people not paying their mortgage. Once you do that, you won’t need to foreclose anymore.
Also, the loan gets modified such that the new loan belongs to someone more reliable and solvent.
The best way to stop foreclosures and modify mortgates is to foreclose on all the people not paying their mortgage. Once you do that, you won’t need to foreclose anymore.
Also, the loan gets modified such that the new loan belongs to someone more reliable and solvent.
The best way to stop foreclosures and modify mortgates is to foreclose on all the people not paying their mortgage. Once you do that, you won’t need to foreclose anymore.
Also, the loan gets modified such that the new loan belongs to someone more reliable and solvent.
