DISQUS

Jimmie · 1 year ago

Are we having fun yet - or what!

sdfsdf · 1 year ago

Hi Susan Berkhoder "or is it hole' er" nice job

Carl W. Henker · 1 year ago

The Borrowers will need to qualify for the modification, meaning show your income that will support any new payment. Most of the loans in question are Alt-A done without the benifit of income documentaion. Will they qualify under today's guidelines?

morganb · 1 year ago

That's a good point Carl. I'm sure many of the loans are SISA fraud-doc loans that make people unable to qualify. I'll wonder if the FDIC says as long as you can pay you can stay - regardless of what traditional underwriting nets out.

Bill Rice · 1 year ago

Not as creative or absurd a strategy as one might think. And probably cheaper in the long-run for taxpayers.

Ironically, this plan was underway prior to the FDIC taking over IMB and CW has been working loan modifications within their servicing portfolio of over a year.

Loan modifications are going to become a mainline bank business in this mortgage market.

Of course, this doesn't make it anymore enjoyable for those of us paying our mortgage payment and theirs.

morganb · 1 year ago

Bill I don't think it's crazy - I just think that lenders should bear the weight of the burden. Why isn't the government hauling these guys in front of Congress and compelling them to make the modifications? Make the investors that made the money take the downside.

Bill Rice · 1 year ago

That is really the big question. I wonder if the government thinks that it is too big a plan for consumers to understand and lenders to execute on a whole market scale.

Massive loan modifications is certainly the cheapest route for taxpayers and lenders, but doing it one loan at a time (current plan) would force the industry to ramp up to refi-boom scale.

Certainly isn't cost effective and if it was we know what kind of scum that would drag back in.

This is a great one to quarterback, but I am not sure I would want Paulson's seat right now.

foreclosurefish · 1 year ago

A brief moment of relative sanity by the government compared to the banking industry. Maybe if lenders had gone through with such a revolutionary concept as providing assistance to homeowners in foreclosure, they wouldn't have failed in the first place. But that assumes banks had enough business acumen that they wouldn't have made so many loans to people with no income and helped inflate the housing bubble.

morganb · 1 year ago

I agree with you Nick, but it should be the government compelling lenders with legal action or other means to take the burden of these modifications - not the tax payers.

Doug · 1 year ago

WTF - we ought to sue the FDIC.

Renter · 1 year ago

This is what socialism looks like. Chuck schumer, long an outspoken advocate for loan modifications including principal reductions, instigated a run on indymac that pushed the bank over the precipice and into the arms of the FDIC. Upon taking control of indymac the FDIC put everyone on notice of its intent to overwrite the contracts of some $15bln in loans held by indymac bank. Today's announcement is confirmation their intent is being implemented, and demonstrates that schumer was able to initiate massive loan modifications by causing a bank run. The bank run and failure of indymac bank is expected to cost the deposit insurance fund, and by extension the US taxpayer, upwards of $8billion. So taxpayers can expect to contribute $8bln to the fund so that we can modify $15bln in mortgage loans.

If anyone can explain how this measure doesn't amount to an enormous windfall to homeowners, or how this measure isn't an enormous penalty on those who recognized prices were overinflated and sat out the housing bubble, I'd love to hear it.

This is beginning to look like a japan-style lost decade.

morganb · 1 year ago

Renter - great insight.

ASP · 1 year ago

I recently read that in California, only 1% of loan modifications involve some sort of loan amount reduction. This caused me to call the local Housing Services non-profit to hear their take, since they complete a large number of loan modifications on behalf of homeowners. They said the 1% was true, and in those instances its where the bank has done something wrong and they're willing to forgive debt in order to avoid a lawsuit. Given that a recent paper from the Fed (Boston) stated the main driver in people leaving their homes was negative equity, you would think more banks would be forgiving debt in order to avoid yet another foreclosure. The only "silver bullet" here is debt forgiveness, any proposal that falls short of that will be to no avail.