Thursday, February 25, 2010

Obama's Plan to Kill the Mortgage Industry

The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program, reports Bloomberg.

Bloomberg continues:
The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.

“It is one of the many ideas under consideration in the administration’s ongoing housing stabilization efforts,” Treasury spokeswoman Meg Reilly said in an e-mail. “This proposal has not been approved and there are no immediate planned announcements on the issue.”

She confirmed the authenticity of the document, which hasn’t been made public.
Who in their right mind is going to make mortgage loans if they know and the prospective borrower knows that borrowers can run mortgage holders through growing mounds and mounds of bureaucratic red tape.

5 comments:

  1. You're not looking at this myopically enough. This gives incentives for more people to buy homes they cannot afford, temporarily boosting numbers before the '10 and '12 elections.

    Why deal with the problems yourself when you can pass them on to the next president?

    The rug already has so much dirt swept under it they'll need to call in archaeologists to get it out.

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  2. The other thing you're not considering is that the loan modification program you're talking about is likely to modify about 1% of home loans... so the current holders of the toxic mortgages will still greatly benefit from any loss-share agreements they have with the FDIC.

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  3. the better question is:
    Who in their right minds....
    are going to make mortgage PAYMENTS?

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  4. The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.

    The proposal, reviewed by lenders last week on a White House conference call,

    “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP


    or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.

    ReplyDelete
  5. If this comes to reality, Banks that are on the ropes now, with a battered loan book (credit quality), will get absolutely hosed.

    What good is having collateral? For that matter, what good is signing a contract?

    It's dumbass proposals like these that dim my hopes for the future.

    ReplyDelete