Comments on: Who Really Wins in a Mortgage Rate Freeze?

By: Are you really surprised that more than half of borrowers with mortgage modifications redefault? — The Baglady

Thu, 11 Dec 2008 02:36:36 +0000

[...] year ago I wrote this article about the government’s plan to freeze mortgage rates and how ridiculous it was. I also [...]

By: Consumer Perception - Mortgage Freeze : agentgenius.com

Consumer Perception - Mortgage Freeze : agentgenius.com — Fri, 14 Dec 2007 00:49:01 +0000

[...] I don’t consider the homeowners who keep their homes in this plan to be winners. Sure, they get to… [...]

By: Esanchez66

Esanchez66 — Thu, 13 Dec 2007 20:13:02 +0000

I am a loan agent with a large national lender and although my livelyhood is dependant on the health of the Real Estate industry i am TOTALLY against any kind of government bail out for borrowers who were motivated by sheer avarice. I have been watching and in some cases even helping people get themselves into more and more debt for over 13 years now. No matter how much I councel borrowers on sound financial management; no matter how much they nod their heads in agreement as Im taking an application to consolidate their newly purchased cars and their tons of credit card debt, and I warn them about the dangers of getting in over their heads, now matter how many times they tell me they’ve learned their lesson this time, I still manage to see most of them every 3 to five years doing the exact same thing over and over again. It’s very sad and although I strongly believe that we all have to take personal responsability for our own actions and we are ultimately responsible for each of our own fates; I can’t help but to blame the Banks for creating their own mess. 7 years ago when some genius came up with the idea to lend people 100% of the value of their home and to do it using a variable product that had the potential for making your balance even higher (Negative Amortization) I knew this was the begining of the end. It didn’t take a scientist to see all this coming. Surely I’m not the only one who foresaw this mess, Im not that smart. I thought for sure the banks would recognize the error in their judgment and emmediately revert back to tighter guidlines, but my underestimation of corporate greed would prove me wrong. Anyway, the long and the short of it is that I have seen about 50% of the work force in my industry go by the wayside, and the rest of us are just hanging on by the skin of our teeth, sharpening our resume’s for that inevitable day when our office is finally closed. Sure there are the super agents of the world who make up about 5% of the industry and they are always telling you how attitude is the most important thing in sales, but more often than not I have found that upon close examination the real thing that keeps these super agents going is just plain GREED. That whole attitude of getting the loan through no matter what it takes, may be admirable to some, but to me, it’s just exactly what got us to where we are now. Don’t get me wrong sales people have to have lots of drive but above all else really great sales people put the needs and security of their clients first, the money is just a by- product of that. God help us.

By: phwest

phwest — Thu, 13 Dec 2007 18:40:31 +0000

I’m not sure this isn’t much ado about nothing. Even absent government interference banks have an incentive to adjust loan terms so as not to force an account into foreclosure when the asset does not completely secure the loan. The group in question (over-extended credit, no equity) is precisely the group that banks would be willing to “amend” loans terms on. As long as the loss associated with amending the loan is less than the loss they would take on foreclosure the bank wins. Banks write down non-performing loans all the time – they try and get the most back they can, and then go and tighten up their lending standards so it doesn’t happen again.

The public nature of the deal has extra benefits for the gov’t and the banks. The Administration gets to look like it’s doing something, and hopefully avoids an S&L scale bailout. The banks get :

1) A relatively cheap default offer (the 2005 start date excludes the really cheap paper from 2002-2004)

2) Sends a clear signal to debtors who are in a bind and might qualify that they MUST stay current to qualify.

3) Some positive PR – “We’re trying to help”

4) Makes the process public, which hopefully offers enough hope to vulnerable debtors that home prices will recover to keep them hanging on, reducing the risk of a major crash.

The borrowers will take their lumps one way or another. Either in one big lump as a foreclosure, or struggle along under a heavy repayment plan and hope circumstances change. But that’s what happens when you speculate with your house.

By: Life isn't fair, and neither is the mortgage freeze - Smart Spending

Life isn't fair, and neither is the mortgage freeze - Smart Spending — Wed, 12 Dec 2007 21:53:04 +0000

[...] The Baglady. And how about the subprime borrowers who will get to keep their homes under the plan? “These homeowners are just indentured servants to a gargantuan money-hungry force,” Baglady writes. “Their rates will be frozen for five years, but they will have to keep on paying [...]