On the heels of Bank of America’s new forgiveness program, Bahana C. Obama plans to ‘expand foreclosure prevention efforts”.
Are You Freakin’ Kidding Me? Three years after the beginning of this mess, the Obama administration and the banks want to help? This is all about protecting a bottom line that would go straight to the bottom of the Mariana Trench if Americans, en masse, just walked away from their underwater homes until the market resets itself. Double bonus, though, guess who gets to foot the bill for Obama’s re-distribution of wealth? $14 Billion in ‘red’ money will be used from the TARP program.
At some point, the peaceful civil disobedience of the American citizen will get the message through to the banks and corporations that THEY DON’T OWN US if we ain’t buying. A national strike is looking better and better.
First Bank of America from this morning’s Palm Beach Post, Money section:
Bank of America Corp. will permanently cut up to 30 percent from home loan balances for tens of thousands of struggling borrowers under a new program that some predict will become industry norm.
The plan, announced Wednesday, was virtually unthinkable just months ago.
So taboo was the idea of forgiving principal amounts, that some lenders refused to comment when Ron Faris, president of West Palm Beach-based Ocwen Financial Services, promoted it as a solution to the continuing foreclosure crisis before a congressional committee earlier this month.
But with millions of Americans underwater on their home loans, and increasingly willing to walk away, bank officials said Wednesday that cutting loan amounts is necessary to reduce defaults.
“The banks have been reluctant to come to the reality that ‘Houston, we have a problem,'” said Michael Sichenzia, president of Dynamic Consulting Enterprises in Deerfield Beach. “It’s inevitable more banks will follow. The cost to administer foreclosures is growing exponentially.”
Bank of America, which estimates it has 1.5 million home loans that are 60 or more days behind on payments, calls its plan “earned principal forgiveness.”
To qualify, a borrower must prove financial hardship, be two months delinquent in payments, and owe at least 20 percent more on the loan than the home is worth.
The program targets the riskiest home loans awarded during the real estate boom including subprime adjustable rate mortgages and certain loans that have a fixed interest rate for the first two years before adjusting annually.
Under the new plan, which begins in May, a portion of the principal balance will be set aside interest free. That principal can then be forgiven over five years if the homeowner stays current on new lowered payments.
The White House will announce Friday an expansion of its foreclosure-prevention efforts to include reducing the mortgage loan balances for some distressed borrowers and giving temporary help to the unemployed, people familiar with the plans said.
In the latest overhaul of the year-old mortgage-loan modification program, these people said, the White House will announce plans to allow unemployed borrowers to receive sharply reduced payments—or a break from making any payments—for at least three months and up to six months. The revamp will also require banks to consider writing down loan balances as part of the formula for lowering monthly payments under the federal Home Affordable Modification Program, or HAMP.
In addition, the administration will introduce a program that uses the Federal Housing Administration to insure new loans for borrowers who are underwater, owing more than the current values of their homes.
Under that program, investors who reduce loan balances to 96.5% of the current property value would refinance borrowers into an FHA-backed loan. Investors would have to reduce first-lien mortgages by at least 10%. For properties that have second-lien mortgages, the program is designed to reduce the total mortgage debt to no more than 115% of the estimated property value. Banks that hold second-liens will be eligible for incentive payments if they write down those loans so borrowers can qualify.
To pay for the expanded program, the administration will allocate $14 billion in money from the Troubled Asset Relief Program that had already been earmarked for foreclosure prevention efforts.
An administration official said that the program adjustments were designed to “better assist responsible homeowners who have been affected by the economic crisis through no fault of their own.” The administration is trying to walk a fine line, offering more help to the most troubled homeowners without encouraging people who can afford their payments to default in the hope of getting similar treatment.
Nope, nobody has been saying for over two years now that a floor has to be put under the home market, we all just wanted the banks to get more money.
Are you getting tired of the dictator-in-chief appeasing everybody but the people footing the bill?
I know a bunch of people that could benefit. Stuck between a rock and a hard place for alot of folks. What’s going to happen to those when we hit the depression part of this recovery?
So if I read this right, we’re spending tax dollars to (once again) rescue the selfish bastages that capitalized on the sub-prime mortgage market.
Nice.
Sorry Ron, but I don’t think this will help anyone that deserves to be helped if I read it right:
To qualify, a borrower must prove financial hardship, be two months delinquent in payments, and owe at least 20 percent more on the loan than the home is worth.
The program targets the riskiest home loans awarded during the real estate boom including subprime adjustable rate mortgages and certain loans that have a fixed interest rate for the first two years before adjusting annually.
I just re-read that, and don’t want anyone to think I don’t want to help honest people that are struggling. I just don’t think that they’re the ones that will get it.
My point is that our money is going to rescue the banks AGAIN! and yes, the people that really need it probably won’t qualify – but the banks will find loans that will qualify so that they can slurp up all the slush money.
Ron on March 25, 2010 at 4:32 pm
You’re probably right that this new effort won’t help a woman like our friend. Here’s her story in a nutshell so let me know if she can be helped.
MM was married and had a nice home in VA Beach. They divorced and she sold the house and moved into an apartment. She was notified it was going condo so had to move out. She came up here to be near her aged, ailing mom and bought a duplex townhouse with a 7% mortgage. She can’t qualify for refi because she lost her job at K-Mart. She doesn’t qualify for unemployment because she worked part time. She’s living on savings and help from her mom. She has never missed or been late with a mortgage payment.
I take it there’s no help from Obama for a good citizen like her. No free Obama money from his stash, right?
Grail Guardian on March 26, 2010 at 2:12 am
Not if she’s honest and actually made her payments Ron. This is Obama World.
clemintine on March 25, 2010 at 6:56 pm
as far as i can tell bo only wants to give money to those that got into homes they could not afford. (i.e. the woman in california that worked as a housekeeper and got a mortgage for a $700,000 home……) the acorn housing group got alot of people into homes they should never have been in. maybe they would have been successful in a home with payments that were actually affordable on their salary…..
the last report i saw stated that approx 50% of the refi loans done under bo’s program have all defaulted again……i hope they are not going to let people have multiple chances to default with our money……
a friend of ours knows someone that tried to do a refi with some company here….he filled out all the documents and paid a $1500 fee, only to be told he did not qualify. the fee is nonrefundable……..
tom coburn gave a great speech on the senate floor today….if you go to the c-span video library and find the afternoon senate session for 3-25-10. his speech is @ approx. 307:00. it is well worth it to listen. he essentially challenged the senate to “grow a pair” and start doing their job…….
Kathy on March 26, 2010 at 12:41 am
Important that we all remember these words,whether you liked him or not. For all the newbies on this site that are of the entitlement mentality he was a Dem.
On a very scary note, I spoke with a client yesterday that is a Realtor. She’d just come from a seminar where they talked about FHA mortgages. She was told that if an FHA loan is applied for, the seller, buyer, listing agent, and selling agent will all be investigated (ie: have credit reports and background checks); if anyone owes any money for back taxes, student loans, child support, or any other debts, the funds will be withheld from the closing proceeds.
She also told me she had a listing where the house is in foreclosure. She got 3 full price offers in December, but has not been able to proceed with any of them because the lender (Wells Fargo) has so many foreclosure offers to deal with, they haven’t even returned anyone’s phone calls and she’s been told not to plan on hearing from anyone anytime soon. Apparently their foreclosure dept went from 350 employees to about 40, and their foreclosure rates are at an all time high. The seller was not upside down in the house when it was put on the market (and sold), but thinks she may be now. She can’t find out because she can’t get through to the lender.
Ron, I don’t think your friend stands a chance except to walk away from it. That’s what the banks want now. I read someplace (probably here) that this is the latest government scam; if the house goes into foreclosure, the bank can get relief (TARP?) from tax dollars and then resell the house later and keep all the profits they get from the sale. It’s supposed to be as lucrative as the sub-prime scam.
Grail – the situation that your client is describing sounds an awful lot like the feds doing what we do when we are totally broke – digging underneath the couch cushions for change…yes?
On the heels of Bank of America’s new forgiveness program, Bahana C. Obama plans to ‘expand foreclosure prevention efforts”.
The image is very apropos. Anyone questioning the legality or wisdom of this? I do know a woman, though, who could benefit from this.
I know a bunch of people that could benefit. Stuck between a rock and a hard place for alot of folks. What’s going to happen to those when we hit the depression part of this recovery?
So if I read this right, we’re spending tax dollars to (once again) rescue the selfish bastages that capitalized on the sub-prime mortgage market.
Nice.
Sorry Ron, but I don’t think this will help anyone that deserves to be helped if I read it right:
I just re-read that, and don’t want anyone to think I don’t want to help honest people that are struggling. I just don’t think that they’re the ones that will get it.
We all know how big your heart is GG.
My point is that our money is going to rescue the banks AGAIN! and yes, the people that really need it probably won’t qualify – but the banks will find loans that will qualify so that they can slurp up all the slush money.
You’re probably right that this new effort won’t help a woman like our friend. Here’s her story in a nutshell so let me know if she can be helped.
MM was married and had a nice home in VA Beach. They divorced and she sold the house and moved into an apartment. She was notified it was going condo so had to move out. She came up here to be near her aged, ailing mom and bought a duplex townhouse with a 7% mortgage. She can’t qualify for refi because she lost her job at K-Mart. She doesn’t qualify for unemployment because she worked part time. She’s living on savings and help from her mom. She has never missed or been late with a mortgage payment.
I take it there’s no help from Obama for a good citizen like her. No free Obama money from his stash, right?
Not if she’s honest and actually made her payments Ron. This is Obama World.
as far as i can tell bo only wants to give money to those that got into homes they could not afford. (i.e. the woman in california that worked as a housekeeper and got a mortgage for a $700,000 home……) the acorn housing group got alot of people into homes they should never have been in. maybe they would have been successful in a home with payments that were actually affordable on their salary…..
the last report i saw stated that approx 50% of the refi loans done under bo’s program have all defaulted again……i hope they are not going to let people have multiple chances to default with our money……
a friend of ours knows someone that tried to do a refi with some company here….he filled out all the documents and paid a $1500 fee, only to be told he did not qualify. the fee is nonrefundable……..
tom coburn gave a great speech on the senate floor today….if you go to the c-span video library and find the afternoon senate session for 3-25-10. his speech is @ approx. 307:00. it is well worth it to listen. he essentially challenged the senate to “grow a pair” and start doing their job…….
Important that we all remember these words,whether you liked him or not.
For all the newbies on this site that are of the entitlement mentality he was a Dem.
http://www.youtube.com/watch?v=5MfXdfXsyNA&feature=player_embedded
On a very scary note, I spoke with a client yesterday that is a Realtor. She’d just come from a seminar where they talked about FHA mortgages. She was told that if an FHA loan is applied for, the seller, buyer, listing agent, and selling agent will all be investigated (ie: have credit reports and background checks); if anyone owes any money for back taxes, student loans, child support, or any other debts, the funds will be withheld from the closing proceeds.
She also told me she had a listing where the house is in foreclosure. She got 3 full price offers in December, but has not been able to proceed with any of them because the lender (Wells Fargo) has so many foreclosure offers to deal with, they haven’t even returned anyone’s phone calls and she’s been told not to plan on hearing from anyone anytime soon. Apparently their foreclosure dept went from 350 employees to about 40, and their foreclosure rates are at an all time high. The seller was not upside down in the house when it was put on the market (and sold), but thinks she may be now. She can’t find out because she can’t get through to the lender.
Ron, I don’t think your friend stands a chance except to walk away from it. That’s what the banks want now. I read someplace (probably here) that this is the latest government scam; if the house goes into foreclosure, the bank can get relief (TARP?) from tax dollars and then resell the house later and keep all the profits they get from the sale. It’s supposed to be as lucrative as the sub-prime scam.
GG – you are thinking of the OneWest video from here:
https://logisticsmonster.com/2010/02/10/how-the-fdic-raped-the-american-taxpayer/
http://www.youtube.com/watch?v=6sL-zMsRU8Y&feature=player_embedded
Grail – the situation that your client is describing sounds an awful lot like the feds doing what we do when we are totally broke – digging underneath the couch cushions for change…yes?
A picture does say a thousand words…all of them, in the instant case, beginning with “$h*tbird.
Just sayin’…