While corporations and bankers received trillions of bailout dollars (enough to PAY OFF every mortgage in America), homeowners have been traumatized by lenders unwilling to modify mortgages or at best, eventually lowering the interest rates while ADDING delinquent amounts and fees to the principal balances. Supposedly lenders CAN lower principal balances under the current programs, but that doesn’t seem to happen.
As always, the people who most NEED help are incapable of fighting for their rights and often don’t even understand the implications of the ever increasing balances. And that’s why I have been recommending that people with financial problems and mortgages exceeding their home’s value simply WALK AWAY from the homes. And of course they should live in their homes as long as possible after they stop making payments.
So I was thrilled to read this article today:
Aug 5, 2010 00:26 EDT
Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.
The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. A few key points:
1) Republican leaders believe this is going to happen since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.
2) Wall Street banks are alerting their clients privately to this possibility. Here is what some are cautiously saying publicly. This from Goldman Sachs:
I sure hope this will happen.
Finally some real relief for the PEOPLE.
It’s too late for the many who already lost their homes, families, health and lives. But, better late than never.
Filed under: Mortgage modification and