New Housing Bill Will Force Loan Modification

Ryan Servatius,

With regards to your comment below,

Wow, what a discussion you tripped off Claudette!

What I'm seeing as a common denominator, even for those who would favor legislation, is a general distrust of government to take care to do it right. 

Don't lose that distrust.

An all-powerful centralized government was never the intention of our country's founders (even the ones who later went on to lead the "Federalist Party").  To a man they viewed a central government as a necessary evil to deal with internation relations and common defense.  This country was founded as an assembly of sovereign states coming together in the common cause of liberty.  Everyone in the room at the time knew that a powerful central government was an enemy to liberty.  Unfortunately, here we are today with a distracted populace and a more-hungry-than-ever central government.  That's why I can't trust anything that is proposed (especially from members of the central government whose character and actions are subject to reproach) by any of the branches in Washington.

Folks, the ultimate answer to this crisis is going to have to come from communities and neighborhoods, people coming together to help those people like the couple that called you, Claudette. 

We've got the realize that feeding more power to a power-mad central government isn't a good long term solution.  I just wish the states would step up as the sovereign powers they are.

OK, 'nuff political analysis...

I guess Durbin didnt get the message that HAMP has met modificaiton goals prior to the Nov. 1 deadline. This just proves that it is never going to be enough. From the National Mortgage News:

HAMP Meets Obama Loan Mod Target

Servicers participating in the Obama Administration's Home Affordable Modification Program have placed over 500,000 borrowers in trial modifications, according to government officials, meeting a benchmark goal several weeks before the Nov. 1 deadline. Administration officials and HAMP servicers are meeting in Washington and they are expected to agree on new streamlined documentation requirements for the loan modification process. Preliminary numbers show HAMP servicers have picked up the pace of moving troubled borrowers into 90-day trial modifications. In addition, some of the modifications are being finalized. Wells Fargo Home Mortgage said it has done 63,000 trials and completed modifications in September, up from 33,200 trials in August. "We have remained focused on exceeding our share of the government's goal to reach 500,000 Home Affordable Modifications by Nov. 1," WFHM co-president Mike Heid said. Bank of America said it has close to 95,000 borrowers in trials, up from 59,900 in August.

Many keep saying, "Let's help others..." WHAT ABOUT THE FUTURE GENERATIONS? How about helping your kids and grandkids, instead of leaving them buried in debt?

I'm all for helping out someone down on their luck, but the truth is, we all are losing something right now. Everyone's 401Ks are tanking, educational funds are drying up, early retirement plans or ANY retirement plans have dissolved into thin air as house values have plunged. Everyday, people are praying, "Please just let me stay healthy or keep my job." So, should we try to bail out all those people who are at the bottom? What will happen to my children's futures if the government does that? Unless you are willing to reach into your pocket and hand them actual dollar bills to get their heads above water, then it's most likely a futile cause. Instead, the government (who has to get the money from SOMEWHERE, right?) raises taxes, and instead of the dollars going to directly to the people who need it, they go to the government program, where that black-hole program eats it up and spits out a teeny-tiny little "solution" to everyone's problems.

I feel for the story about the elderly couple, one with cancer, one in bartending school...but in helping them, my kids will suffer the consequences. MY KIDS. I really don't care about me. What I think is we all, as a country, have to take the hit now, and take it hard. We have to 'man-up' and bring all this spending under control. The elderly couple should go live with their kids, niece, whomever. They should solicit their church for help. Their house shouldn't be saved with my kids' futures.

Janice B.

Seems to me there is something fundamentally wrong with this. The politician's intentions are good but I can't understand how, in the United States of America, that the government can force a private business to change the terms of a perfectly legal contract to that business' determent. If we start going down this road where does it end? Just throw contract law out the window? I'm thinking that if this were challenged in court that there is no way that the banks would lose.

The only reason they are doing this is to avoid the next three or four waves of foreclosures coming soon.

Claudette,

Mortgage lenders have undoubtedly been dragging their feet on loan mods and perhaps this bill will make a difference. There are still plenty of foreclosures on the horizon, so it isn't too late.

At what cost?  Billions of dollars coming from whom? 

America has been down this road already- it was called the Great Depression of 1929.  Exactly, how much control do you want the govenrment to have? Some of it, most of it or all of it?

"We the people"  have no say in this matter.

KUDOS to #110 121, 156 and 158 --- and all the others who want to help, but want the feds to stay out of it!  And while I don't care for the tone of #46, he's essentially correct.  Our Fed Govt was never intended to do anything except preserve our Constitution and protect us from our enemies.

And, folks, GIVEAWAYS HURT EVERYONE!  They are the lure that enslaves and destroys the will of otherwise good people. 

MY GRIPES:

I'm furious that lenders were "forced" to give loans to people who would not normally qualify

I'm seriouisly pi__ed that lenders tried to increase their profits with such a risky move as packaging mortgages and then selling them as securities

I feel betrayed by Paulson et al for not doing their jobs and then pushing the panic button (I really think he just wanted to help out his friends in the financial industry)

I could kick myself for voting for someone who was asleep at the switch, giving Paulson the opportunity to do this

While I feel for people who got into loans they didn't understand -- I don't think such naivete should be rewarded -- for then what will encourage such people to be more wary in the future?

[I am reminded of the time I ordered a weight loss product that promised astonishing results -- lost no weight -- and discovered that the "money back guarantee" wasn't worth much because company from which I ordered the product changed their address every 30 days or so.  Won't do THAT again]

MY HOPE:

I hope (and in fact believe) Obama will press his message of personal responsibility while he is encouraging us to share & care.

I  pray regularly for people who "did it the right way" only to lose their jobs and income and now their home thru no fault of their own.  These are the victims

I believe the most important things Americans can do are

1. READ, Folks, READ -- if you don't know how we got here, you're going to be falling for every scheme any lobbyist or poitician comes up with.

2. Think about (at least) doing what intelligent people have always done in the face of a crisis: examine the past so we don't repeat it, batten down the hatches and ride out the storm, and finally embrace the future with more sense and a lot more caution.

3. Reach out and help those you can ... those in your sphere, people you see or hear from.  Remeber the guy with the starfish?  If each of us thinks like that guy, we'll do more (collectively) than any government can do.

4. Keep in mind that our "enemies" won't necessarily plant bombs and carry guns ... some will waive I.O.U.s at our governenment and demand payment in the form of "taking over" our lives.  THAT DISASTER WOULD FAR OUT-WEIGH OUR CURRENT ECONOMIC CRISIS!

One thing seems certain:  I probably won't ever be able to retire!  But then, retirement is a 20th century invention that looks like it may die in the 21st. Anyway, I don't mind working forever since I like what I do -- and I'm hoping if I keep on being being engaged and productive, God will let me stick around. 

I've noticed that the Govt. NEVER comes up with the idea of drastically reducing taxes or even eliminating tax for a year.

The "answer" seems to be to decide where to spend (read: BLOW) the citizens money on bailing out idiots.

To the poster who thinks Banks loan their "assets held", this would represent 5-10% of all mortgages. Most of the loans I've done were sold before funding and most of those were sold to fannie. So, you might be right in terms of who's money funds the loan but, after a very short time that loan is sold and the funds are returned to the Lender to loan them again!

Just delaying the inevitable and slowing down the correction... the longer it takes... the longer we get to put up with changing rules every four months to correct the last failures...

I think by now... we could have just paid off everybody's mortgage with all of the wasted money...

There are some great comments here.  Here's my thoughts.

A 30 year mortgage is a rip off to the consumer.  The banks that negotiate with a home owner that is going to default will benefit to do a principle reduction and, or loan mod vs selling the asset at a depressed REO price.  If there is no intervention then the market will correct further and the truth that the middle class is already gone will surface.  I have already seen homes selling for 25% of their "peak" values.  Where will it go if left unchecked 2.5%, NO WAY, people are greedy, and have short lived memories. 

"home owners" are really just renting from the banks.  This is just like it was with "serfs and their masters"

We already live in a socialized country. Don't you enjoy having police, fire dept, libraries, social security, free education for everyone, medicare/medicad.  Government intervention (sponsored by wall street) was a major factor in creating the bubble, so whats really wrong with them trying to fix it now?

 Since the goverment has already bailed out the banks, insurance, wall street and auto industry, why should they stop now and not help the consumers.  Help homeowners, the banks have been ripping off the consumers for years.  They don't need any help.

A lot of good responses on both sides of the agrument for gov't intervention. IMO the problem with the gov't creating any new bill that requires taxpayer money is usually doomed to fail because 1) Hardly any of them actually reads the bill in it's entirety (that's why they hire assistants); 2) Even when a bill addresses oversight it never gets done correctly until the sh** hits the fan but then the damage is done except for the blame game; 3) Most common sense people know it's a shaky bill when a 1,000 page bill to reported to the floor for a vote with a 24 HR preveiw before the vote (I'm not a speed reader & I always try to disect correspondance before saying aye or nay). I feel that this is the problem our Congress has set up for years w/o considering the unintended consequences of their actions.

I also feel that there are some people out there that are truly trying to do the best they can but there are those that this was a scam from the beginning and had no intention of honoring their contract. There are so many States that have some great programs to help but there are some that are weak. I have an idea that if they are really want to help the homeowners then why not reach out to the States's Attorney Generals had ask for input; then take what works & create a bill as a baseline for banks to follow.

I still feel that instead of throwing all this money into insurance, banks, mortgage & auto industries why not just give the money spent back to the taxpayers and let them spend it on mortgages, cars or whatever and if after that they loose their home so be it, Just my 2 cents.

C - I think this is such a complicated and tough issue.  It is so hard to hear the calls that I receive everyday, some legit and some not as it seems like there is always someone trying to take advantage of the system.  I think that homeowners losing jobs and not being able to afford their payments anymore is difficult. 

The banks on the other hand are doing whatever they can to make money and get money out of homeowners, as it is an  investment and just business to them and the human element is really not high on their list.  Some banks are still making amazing profits and received alot of our Tax Payer Money, then over 140 banks closed this year.

These are tough times and all I can do as one individual is to help one family at a time.  I also think if we all focus on helping one family at a time than maybe we will actually change things.

Anything to do with loan modifications and the new and expanded gov't programs seem to be focusing on the successes (albeit limited) with relationship to principal reduction.  I expect this to be a theme in 2010.

Unfortunately, the Fannie Mae loan Modification works like this.

If you have missed a couple mortgage payments, and if you can show ability to repay, Fannie Mae will pay your lender to bring your loan current.  They will not reduce your interest rate.  If you have a 30 yr fixed rate at 8% and pay $1,000 month mortgage payment, by the time Fannie Mae "helps" you out, you now owe $1,000 + ($79 month on the 15 yr Fannie Mae 2nd).

Be very careful!  Many of these so called "Loan Modifications" are there to help your banker more than they help you.  And if you now want to do a HUD refine, and were late on a payment during the previous 12 months, you will not qualify.

SO far it's all been "Smoke & Mirrors".  I hope they do something to actually allow a troubled borrower the option to refi into a lower payment.