President Bush wants Congress to act fast on pending legislation that would give homeowners more options for refinancing their home loans. Economic adviser Ed Gillespie told reporters Bush wants Congress to act faster to "help make the market more stable."
While some support this legislation, others think that those in trouble have made their own beds and now they must lie in them. Even so, many people who didn't make any mistake and have fixed-rate loans are still feeling the pain as home prices continue to fall. Anything that can be done to help homeowners avoid foreclosure and stay in their homes will help everyone. Fewer homes will end up on the market at fire sale prices and the market will begin to stabilize.
What legislation does Bush want to pass? There are three key pieces:
- Make it easier for low-income homeowners to refinance adjustable-rate mortgages through the Federal Housing Administration. Of course, for this to work pre-payment penalties on those ARMs would have to be outlawed. Many of the ARMs set to jump 2% to 3% have prepayment penalties of $12,000 or more and home values lower than the mortgage amount due.
- Increase the allowable loans through Fannie Mae so it can help homeowners with loans higher than $417,000. This is aimed primarily at middle- and upper-income borrowers who want to refinance ARMs due to reset higher. Just before this crisis began many Republicans wanted to put tighter controls on the growth of Fannie Mae and Freddie Mac. Now that the crisis is at hand I think Congress is beginning to realize that Fannie Mae and Freddie Mac are a critical part of this country's housing market. Many lenders say that 80% of new loans are dependent on these government-mandated enterprises.
- Give states the authority to issue more tax-exempt bonds to help troubled homeowners refinance their homes. This will permit the states hardest hit with foreclosures to come up with state-sponsored aid programs.
All three programs are good fixes and will help homeowners to refinance and avoid upcoming resets to their ARMs that they can't afford. Once investors see that homeowners have options they may finally realize that allowing homeowners to freeze current rates may be better than losing the income completely to a refinance and start to make reasonable deals to keep the business. FDIC Chairman Sheila Bair has consistently said that about 80% of all ARMs are current on payments. These programs could help them stay that way and avoid even more foreclosures.
Lita Epstein has written more than 20 books including "The 250 Questions You Should Ask to Avoid Foreclosure" and the "Complete Idiot's Guide to Improving Your Credit Score."
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Reader Comments (Page 1 of 1)
1-02-2008 @ 1:11PM
David Huston said...
What Ms. Bair says, if true, means that 20% of all ARMS are in default! That's a cataclysmic number. Once again, the Bush Administration is proving how essentially worthless it is by offering little or nothing to persons who need help while holding out goodies for its rich friends - let's be sure to make those Bush tax cuts for the rich permanent!
1-02-2008 @ 10:30PM
Barbara Ann Jackson said...
re: Investor Culpability, Foreclosure Fraud, FREDDIE MAC, Well Fargo
Critical to the Foreclosure Crisis is FRAUD, which enables LENDERS to ILLEGALLY FLIP property. Such Debt Collector attorneys file foreclosure naming DEFUNCT mortgage companies, or companies which NO LONGER hold the Note; or affix "ransom" amounts (fees) exceeding "Acceleration Clauses. Any DECLARATION ABOUT $$$ billion dollar losses due to mortgage DEFAULT should be weighed against needless $$$$ to lawyers who outmaneuver -and persecute owners for opposing these frauds. " In States such as Louisiana, 2 particular mortgage companies which benefit from fraudulent foreclosures are Wells Fargo and FREDDIE MAC.
Despite a property owner's entitlement to Challenge CONTRARY-TO-LAW loss of his / her home, most property owners LACK legal knowledge; the Court System is REFRACTORY; and there are limited attorneys with Consumer Law acumen. Also, when borrowers sue for "Unfair Debt Collection Practices," damages, the collector gets to make more $$ through prolonged litigation, as co-conspirators enjoy the foreclosure fraud pie, Investors get zero. (See www.lawgrace.org)
Securities Investors need to take action, responsibility, and become better informed about how debt collection fraud as well as mortgage servicers' misdeeds hurts borrowers as well as siphons incalculable amounts of money from what Investors should reap. (See "Limiting Abuse and Opportunism By Mortgage Servicers," AND "Private Property Rights Deferred: Has Predatory Mortgage Servicing Destroyed The American Dream" by Rawle Andrews, Jr., Esq.,and Leroy Jones, Jr., J.D. Visit the msfraud.org website.) **In the near future, because of negligence, Investors will likely share liability for collectors’ misdeeds.
SEE:
Mortgage Mess, Foreclosure Fraud and Impediments to Justice,
http://newsblaze.com/story/20071203130614tsop.nb/newsblaze/TOPSTORY/Top-Stories.
ILLEGAL REAL ESTATE FLIPPING...
http://www.lawgrace.org/2007/06/21/illegal-real-estate-flipping-unfair-enrichment-etc/
Comment on the Foreclosure of Judge Reginald Badeaux’s Home
http://www.lawgrace.org/2007/12/08/my-december-7-2007-comment-posted-to-the-times-picayune-blog-about-the-news-article-entitled-%e2%80%9cjudge-gets-debt-reprieve-badeaux-has-skipped-mortgage-payments%e2%80%9d-the-foreclosure-of-this-lo/
-Barbara Ann Jackson
www.lawgrace.org
1-03-2008 @ 1:43PM
Stephen said...
Most states have victim compensation programs for victims of violent crimes, but not for victims of financial crimes. As integrity continues to fade from American business, protections from scam artists are sorely lacking, and likewise, opportunities to be made whole again for the victims are non-existent.
Victims of financial crimes experience all the same emotions as do those of violent crimes, but the effects are longer lasting if not permanent. Americans are exploited every day by predatory businesses, primarily lenders and the real estate industry is an historic model of a systemic structure deliberately designed for fraud.
Borrowers believed they were talking to educated experts practicing reasonably ethical enterprise. No consumer expects such blatant fraud from any business and only gets it from the real estate industry. Hence, those in trouble are victims. Not stupid. They cannot recover from their trauma without help, and the states are liable for not providing reasonable consumer protections from an industry comprised of racketeering and con-artists.