The important take away is that the company that you think might own the mortgage is in fact only the servicer of the mortgage. The actual loan has been split into five different pools with any number of different investors buying portions of those pools. There is no ONE owner to modify the loan.
BACK TO ARNOLD'S
Although it's hard to find the actual details of "the deal", here's what I can determine for Arnold's plan to be effective...
- The Lender will have to have NOT sold the loan. This does happen. Portfolio lenders have a better chance of keeping their loans, but none of the 4 mentioned are portfolio.
- The Borrower must not have ever fallen behind. This happens too. I have to wonder though how often. I've seen reports that up to 70% of homeowners that lose their homes thru foreclosure NEVER contact their lender. How many of these resets will fall behind first, then decide to call their lender, only to find out they are too late?
- Primary residence only, no investment properties. Nobody invests in CA Real Estate do they? While the majority might be primary homes I also imagine we have a high number of Investment homes in trouble.
- Only those that lenders determine cannot make the reset payment. Isn't this another arbitrary rule putting the final determining factor in the hands of the those that made the decision to give this loan to someone who can't afford it in the first place?
Once again, real facts are very hard to find. Much of this is conjecture and speculation. While they specify "Reset" I also have to wonder about the other R word, "Recast". Does this plan not include those that have a Payment Option ARM? I see these as being the real toxic loans out there. Remember, I used to have an Option ARM Factory on the same floor as my building. I know there's plenty of Option ARMs out there. They have to include those loans right? Don't bet on it.
As toxic as you might think the dreaded Payment Option ARM is, they were never classified as Subprime. That's right. They are an Alt-A product. Does that mean they are not included in the Arnold Plan? He specifically called it a Subprime Plan. Once again, nobody knows. Personally, I wouldn't bet on it.
THIS ISN'T HAPPY DAYS
I found plenty of real estate blogs touting the good news. "We're Saved!", they said putting the Gov up on a shiny marble column. Many of the comments on those blogs have also been of the same voice. "It's about time!" and, "Arnold will force these no good Lenders into doing the right thing", and "What a great post for Sacramento, For Californian for the whole country. Accurate in all the details. And it sounds live the Governor heard it, and shared it with the top lenders... now if the others will just follow."
The mainstream media followed suit or visa versa. Here's a sampling from San Diego, MSNBC, San Jose, and Stockton. Granted, reporters and blog writers are not financial experts. Arnold (the Gov.) might run the state, and we might be a pretty big state (GDP), but there are realistic limits to what he can really do.
I did find just one differing opinion outside the typical bubble bloggers. The Modesto Bee (geographically close to the Foreclosure Capital of Stockton, CA) reported a slightly different story than the rest. "Those four lenders, however, told The Bee on Wednesday that their lending policies haven't changed and the governor didn't get them to agree to anything new."
I like reporters that dig a little deeper than the press release for a story.
The list of politicians raging against the lending machine grows daily. Barney Frank, Chuck Schumer, Eliot Spitzer, Hillary Clinton, and on and on... Which leads me to ask the question, Is this all just Political Posturing at it's best? Not just by Arnold but by the Loan Servicer's as well? I hope not. Only time will tell.
One thing is clear. If you are homeowner in trouble now, or heading into trouble soon. Do something yourself now - don't hope and wish and pray that somebody will come and rescue you. Start talking to a real mortgage professional now! The Terminator isn't coming to save you - this isn't an Arnold Movie. It's real life and your home is at stake.
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