They don't have the answers, because they don't even know the right questions.
Let me start off by saying that I strongly oppose the proposed 5-year "rate freeze" plan that President George Bush has suggested to the American public in regards to subprime loans set to "readjust" to higher interests rates, with the ambition to "curb" the number of foreclosures set to take place in the housing market over the next 24 months.
I pose this question, "How can Uncle Sam get that right when the President can't even put out the right toll-free number on December 6th, while making a public address on national television, promoting the new "Hope Now Hotline" set up by his administration?
President Bush stated, "And I have a message for every homeowner worried about rising mortgage payments: The best you can do for your family is to call 1-800-995-HOPE. That is 1-800-995-H-O-P-E," he said.
Anyone who dialed 1-800-995-HOPE was greeted by just a busy signal, because the correct "Hope Now Hotline" number is 1-888-995-HOPE.
I'll set the stage, so you can see the "Big Picture" and flaws in President Bush's "rate freeze" plan.
Back in the old days, you would walk into a bank and apply for a home loan. You had a relationship built with that bank. They knew your ability and willingness to make good on borrowed money, and you knew where to go to make payments and find them if needed. You knew who "carried the mortgage" on your home and you would have the ability to sit face-to-face and "renegotiate" terms if you were in trouble, as long as it was agreeable to both parties.
In reality, very few mortgages today are "portfolio" loans, held by the original bank that underwrote the loan and lent you money. Why? The banks would rather make a loan to you with a set profit, "service" all of the home loans they underwrote for a small fee every month and "free up" their capital by selling off the loan on the secondary market to investors to make new loans. This system creates much less risk for the bank, since those loans underwritten are not on their balance sheets, rather, in the hands of investors.
So, here's what generally does happen today.
Let's say your name is Bob. 10 Bob loans will be "bundled together', which have similar characteristics, to be placed into a "mortgage backed security", to be sold on Wall Street to investors in the US and across the world. You may be paying Wells Fargo or Countrywide for your mortgage every month, but an investor in Japan may actually "hold" your mortgage.
Now think about this. You are a full grown adult that has entered into a "legal binding contract" to make good on the mortgage. Meanwhile, you have the bank that is typically just "servicing" the loan and an investor (Note that not all investors are "Big Time Wall Street Investors!" Potential losers include; pension funds for teachers, firemen, police and an array of mutual funds, whose clients are individual investors.) Now the US Government steps in and says, "We're going to freeze interest rates on your investment for 5 years!" Let me ask you, what investor in their right mind would allow anyone to devalue their investment? Especially the Government!
Do you see the fundamental flaw? Times have changed and the way that our mortgage system works is much more different and complex then the old days. If we are to see a "free up" of capital into the mortgage markets to lend money again, there needs to be confidence on Wall Street that Uncle Sam isn't going to step in and "freeze" their investments. Otherwise, most investors will take their money elsewhere, with less risk and the same returns. When investing in "subprime" loans, investors took the "calculated risk" that those mortgages might end up defaulting or going into foreclosure. Why? The returns are better. Again, we are setup as a risk and reward economy folks.
One of the main reasons why the Real Estate market is having trouble right now in the US, with an abundant amount of homes on the market, is the lack of money being instilled back into the mortgage process by investors, creating "liquidity issues" for banks and purchase money for homebuyers. The hold up is due to investors not being happy with the underwriting practices of lenders. After all, once it's off their books, "it's not their problem!" The free market is now driving the mortgage industry to go back to the fundamentals of underwriting with higher credit score requirements, lower loan to value ratios and the documentation of income, assets and job history. If "mortgage backed securities" stop selling on Wall Street because of Government intervention, the flow of money for banks to lend out on will "dry up" even more, creating less "willing and able buyers" to buy homes in the "buyers market" we are currently in.
To that thought, I pose a few major fundamental questions that need to be answered in regards to President Bush's "rate freeze" plan.
1.) Do you think President Bush's plan is really about helping homeowners or more about covering the "ASSets" of lenders?
Certainly, from a political standpoint, it looks great in the American eye that you're trying to do something. However, many have stressed that this is nothing more than a political ploy around an upcoming election year to make it appear as though they are actually doing something about the foreclosure/lending problem. Presidential contender Sen. Hillary Clinton is already talking about stretching it to seven years, and that bidding war has just begun.
If you dissect President Bush's plan, two main criteria need to be in place in order to be eligible under the "rate freeze" plan:
A.) You can't have any past or current mortgage lates on your mortgage
B.) You must have less than a 3% equity position in the property.
To me, that sounds like you're trying to entice subprime homeowners to pay their mortgage on time, when they probably would have walked away from their home, because the loan was set to "readjust" to a higher payment they couldn't afford in a home that is worth less then they could sell it for.
In my mind, you are only delaying the inevitable. The idea of carrying out the foreclosures for an additional 5 years will only drag out the "market correction" that MUST take place for home values to be in line with incomes once again!
2.) Why should those with bad credit, living in homes beyond their means be rewarded, while those that are in the same position with good credit be ignored?
There needs to be a level playing field!
3.) What ever happened to a Capitalistic, free market?
One of the joys of living in the United States is the ability to make your own free decisions, based on a risk and reward system. Should you make good decisions, you will most likely be rewarded. On the flipside, should you make bad ones, you may take a loss. Trust that I have compassion for families that are set to lose their homes. Certainly, no one likes to see that and it is bad for the psyche of our country. But a "rate freeze" doesn't enable the person that made bad choices to make better ones. In fact, it only breeds more bad decisions by rewarding bad past decisions.
Honoring contracts and property rights is absolutely essential to the proper functioning of a free society and free economy. A mortgage is a binding contract between consenting adults. A mortgage-backed security is private property. It is the antithesis of a free market for the government to fix prices, pressure mortgage service companies into renegotiating contracts, and thereby expropriate property rights of those stuck holding mortgage-backed securities
So there you have it. President George Bush's "Rate Freeze" plan. One that lawyers will have a field day on, as contracts are enforced and securities are jeopardized, while the faith in the current mortgage system by investors is lost!
I urge you to get the facts and voice your opinion.
Here are some quick facts about President George Bush's "Rate Freeze" plan:
How many will be affected? The estimated number of loans affected by President Bush's proposed plan will be between 145,000 and 360,000.
Which adjustable-rate mortgages are affected? To qualify to have their interest rate frozen for five years, home owners must have received a loan sometime between Jan. 1, 2005, and July 31, 2007, and be facing a reset of their interest rate sometime between Jan. 1, 2008, and July 31, 2010.
Who qualifies for this deal? Home owners who haven't missed a payment, but who might if their mortgage resets. Those who can't afford the higher payments, and who have credit scores below 660 and less than 3 percent equity in their homes, will get the biggest break from the lenders. People who are financially secure enough to pay the higher mortgage payments don't qualify.
Do owners of second homes or investors qualify? No. The plan excludes people who don't live in the property that's facing foreclosure.
Too much information to digest all at once. But good information nonetheless. People have to take responsibility for what they've done and not think BIG GOVT will bail them out.
Scott.... I can see why this was featured.... excellent break down..... I wish I had seen this post an hour ago because I just wrote about all of this. But I am going to see where I can squeeze in your post... everyone needs to read this.
I have always felt that the rate freeze is about bailing out lenders. It is disguised as a plan to help homeowners. As with everything there will be certain parts of the country that will be affected more. Places like California where the proportion of ARM's, Option ARM's & interest only loans were prolific will suffer the most.
I would be even more worried if President Bush was actually writing the bill, There is no doubt that it is only to help the lenders and big money interests....I did hear a show that said that the bailout money is less than all these homes going at one time...which they are falling pretty quickly now...I think better to move thru the mess instead of a prolonged problem
I completely disagree with you. I have been in the mortgage business for a long time working for myself and previously for some of those BIG mortgage companies.
You are in the mortgage business. Have you ever looked at the margins on the sub prime loans you were offering? 6.5% Over LIBOR on a 2 year fixed, right? Oh, and that's with a Pre-payment penalty! LIBOR is at 4.91% so 3rd grade math tells us the fully indexed rate is 11.41% Most of the sub prime borrowers this plan hopes to help are the folks that are at about 7% now and will go to 10% when the loan adjusts and then up to the full 11.41% six months later. These loans usually have a 3% cap at the end of the initial period and then a 1% cap every six months after that. Someone that has been paying the mortgage at 7% for the last two years and is more than likely on a 100% Loan To Value deal has choices to make. The market is in the toilet so they can not refinance. They can't afford the payment jump. Guess what? They walk away from the home and one more foreclosure hits the market.
What about the investor? Dang, he doesn't get that higher return!! Oh, darn. Think about it. The investor will never get the higher return, he'll just get another REO. Oh, and he'll write down about 35% of the balance on his 100% financing loan, put another foreclosure on the market and sit on the dump for six months and sell it at even a larger loss.
On a $417,000 loan a 3% jump raises the borrowers payment $885.16. Then six months later the rate goes up another 1% and another $311.72 on this guys payment. Payments go up $1,196.88 over six months time. That's a 43% increase in a persons mortgage payment and it could go up another 1% in six months again depending on the start rate.
Lender bailout? The lenders don't hold the paper, remember? They passed the loans on and investors bought it. The sub prime lenders went under because they were selling a product that has no (investor) buyers. The loans they offered and WE sold were no longer being bought.
HOPE NOW-Lenders and Borrowers Here is the skinny on this.
Real help or a Political Olivebranch
American Securitization Forum, which represents companies that issue mortgage backed securities, as well as investors, loan servicers and rating agencies, issued a 34 page document outlining guidelines for servicers to follow in streamlining refinancing or loan modifications on adjustable rate mortgages that are scheduled to adjust in the next 2 1/2 years.
The agreement provides framework to evaluate borrowers' situations, and expedites processes for loan servicers to pursue refinancing and loan modification options on a more systematic basis.
Details of how this works;
Applies to first mortgages only
Adjustable rate mortgages fixed for 3 years or less (ie: 2/28 & 3/27 ARM's etc.)
Only loans originated between January 1, 2005 and July 31, 2007
Have initial reset rate between January 1, 2008 and July 31, 2010
The streamlined loan modification approach would be begin before the initial reset and typically should begin 120 days prior to the reset of the borrowers rate
If loan to value (LTV) or cash loan to value (CLTV) is below 97%, servicer may obtain an updated value via desk top appraisal (AVM) or broker price opinion (BPO)
All servicers of 2nd liens "should" cooperate fully (should does not mean mandatory and can be a HUGE issue)
Borrowers will be divided into 3 segments;
•1. Refinance - Borrowers who are likely to be able to refinance
•2. Loan Modification - Borrowers unlikely to refinance
•3. Loss Mitigation - Borrower is not current and demonstrating a difficulty in meeting the introductory rate
Borrowers in Segment 1 - Refinance
Current - Means the loan must not be more than 30 days delinquent and must not have been delinquent 1×60 days in the last 12 months.
Loan to Value Test (LTV) - All current loans with an LTV (based on 1st lien only) greater than 97% are deemed not eligible and will be placed in segment 2.
Not FHA Secure Eligible - All current loans that otherwise do not satisfy FHA Secure requirements, including delinquency history, debt to income ratios at origination and loan amount standards are within segment 2
Borrowers in Segment 2 Loan Modification
Occupancy - Borrower currently occupies the property as a primary residence
FICO Score Test - If the current FICO score is less than 660 and is less than a score higher than the FICO score at origination, the borrowers is considered to have met the "FICO test"
Rate Adjustment Test - The servicer determines that, at the upcoming reset, the payment amount would go up by more than 10%
Can't Meet the FICO Test?- The servicer will use an alternate analysis to determine if he borrower is eligible for a loan modification as well as the terms of the loan modification. This would be done on a case by case basis with a full analysis of the borrowers debt to income
For borrowers that are eligible for a fast track modification, the fast track option is non-exclusive and DOES NOT preclude a servicer from using an alternate analysis to determine if a borrower is eligible for a loan modification, as well as the terms of the modification.
Lenders and servicers DO NOT have to fast track loan modifications and if they chose to.
Borrowers in Segment 3 - Loss Mitigation
Borrowers in segment 3 will be stuck in the never ending grinding wheels of the servicers loss mitigation department and will most likely have a small chance working some kind of loan workout or loan modification with their lender.
Now you can see how few borrowers that this will actually help. The process for specific borrowers circumstances are more carefully determined to implement this program. Although it is a step in the right direction this it is a very small step.
Good post. I hope that this plan brings investors, servicers and borrowers to talk about options. The plan is not mandatory so all lenders could just blow it off. Or they could come up with their own modification plans.
Anyone that has looked at a sub-prime loan knows what will happen when that puppy re-sets. We keep forgetting to mention the family that loses their home. No one wins when a sub-prime loan resets and the borrower can not refinance, sell or make the dramatically higher payment.
How many borrowers are going to understand the logic of going to the government for help with a modification of their loan instrument when they didn't understand their loan instrument when they purchased their house?
OR, did they understand their loan instrument, banked on more appreciation to refinance or sell and pocket the difference??? I know lots of them.
I cannot find anything good about this program. However, my real objection to it is the inequity.
This isn't a bailout as it's structured right now, it an alliance of the largest lenders being proactive in mitigating future loss. As stated above, what's to gain on adjusting on a mortgage that has no equity when it's in the financial interest of the borrower to walk away? It's better for the lender to find a workable plan for the borrower and hope the market turns in the near future.
What an excellent post! and even more excellent comments! This is excactly what active Rain is all about....sharing information and gaining knowledge in the field where we make our living. :)
So, the bill is aimed at helping troubled home owners. Yet wouldn't a troubled home owner be behind in payments? Sounds like a lot of spin that won't be helping too many.
The homeowner isn't a troubled home owner yet.... They are making their payments now at the low teaser rates but when those rates go up 3% and the payments skyrocket they will be in trouble! The investors need to call the servicers and ask them to contact borrowers and work stuff out. If someone is already behind on the payments it is not because of a re-set.
Add 3% to the interest rate on your home loan and see if you could make the payment. What happens to the value on your home when your neighbor walks away and his home goes REO? Do you benefit? Does he? Does the investor writing off 35% of the balance? Who wins?
If Bush does it, it is automatically suspect. I believe this is a way to put on a show for the public that he is actually doing something, when in fact it is a typically flawed policy. And he can't even get the number right. Same type of screw-up from the king of screw-ups.
I completely agree with Richard Allen and respectfully disagree with Scott Gormley. Truly, there is a lose-lose when the sub-prime note re-sets. The investor loses, the seller's credit goes in the tank and the market receives another foreclosure. Scott, as you are vehemently opposed to the President's proposed plan, what is your proposed solution? As an aside, it would be interesting to observe how many borrowers who may qualify under the plan, would actually come forward. Most likely, the great majority of them and/or the lender fudged to secure the loan in the first place, and now they would need to come forward with their info?
Michael Levison, The Alan Shafran Group, Carlsbad, CA
Maybe a good solution would be to leave it alone. Let people get the actual result of their decision.
Scott, this was laid right out there, in a clear and concise manner. Great post, and worthy of the feature.
While it is a loser for the borrower when the loan resets to something they can't pay, most of the loans WON'T reset to an unpayable level, and so the rates that are frozen actually represent a bigger loss to the investor.
Let's say you have $1m in loans. they are at 5%, and can reset to 10%. That means that the income from those loans will double. If 1/2 of them go into default, and the properties are auctioned off at 50% of the value, the investor is still better off. They now only have $500k on the line, and it is earning 10%... the same income as $1m at 5%. And the other $250k is now available for other investments.
If you have foreclosure rates under 50%, or if the proceeds of the foreclosure sales are over 50%, it just gets better for the investor.
This whole thing is about the perception of doing something. I can see the Democrats wetting themselves over the prospect of ratcheting up the rhetoric and trying to do more for all of the poor shlubs that made poor choices... at the expense of the evil people that made good choices.
You blew me away when I read that only those with less than 3% equity would qualify. So, that sure leaves out a huge segment, doesn't it. Everytime the government gets involved in fixing a problem........well, what can I say?
Lane, you must also factor in the cost impact on the lender that it takes to foreclose. Freddie Mac says it costs an average of $60,000 to foreclose on a home. For this reason alone, you will soon see lots more short-sales materializing and closing quicker. At this point, any solution is a band aid applied to a puncture wound, but perhaps the advent of greater short-sale acceptance will provide some relief.
Michael Levison, The Alan Shafran Group, Carlsbad, CA
The rate freeze plan is an EXCELLENT PLAN. It is going to prevent 600,000 more foreclosures. I don't believe the teachers pension funds you mention are upset at the freeze. I don't believe any teachers want to see peoples arm rates go to 11.5% and then for them to be thrown in the street, in the name of having a fantastic interest rate return on their pension portfolio. Which wouldn't happen by the way, because homeowners just won't/can't make their monthly mortgage payment, and then the pension fund will have 100,000 foreclosures in which they have to evict people, foreclose on people (all expensive steps) and then sell the property as a foreclosure and get less for it than what is owed on the loan.
Food for thought: I have looked at over 20 foreclosures in the past 90 days. All but one was completely torn up and trashed by the homeowner obviously upset at losing their home. I have seen toilets ripped out and thrown into bedrooms, 100's of holes poked in walls, light fixtures busted, electrical wiring ripped out of walls, and ovens ripped out of their kitchen place and tossed on their side. One guy actually took a dump in the living room. People aren't really happy when they lose their home. Especially if they feel they've lost it because their bank is taking advantage of them by raising their rate and doubling their payment. This has tended to really upset people to the point of dumping in the living room and leaving a note. This is not the world we want scott; dirty torn up homes and 800,000 homeless children. I don't want to be on your bad side or have you upset with me, but I think you really missed some serious points with this post. Or maybe you just weren't aware of a couple items. Sorry.
I say we just go with the rate freeze and give people some time to figure out some avenues. People honestly just need some time. People are smart. Throw them a rope and they'll grab on to it. The problem is... Most lenders didn't give people much time. Most lenders just said... "make your payment or get the heck out". And they weren't real nice about it. Repo'ing someones car is one thing. Taking their kids teddy bear and tossing it in the trash, and then giving them a phone number to the mission is another.
Investors took that "calculated risk", when investing in subprime mortgage backed securities to begin with, validating those prepayment penalties and high margins you speak of. Is it really a shocker that borrowers with 500 FICO Scores that did 100% financing and had no "vested interest" in the property are now in trouble?
Personally, my company and I did not participate in the subprime market. I dealt with A and Alt-A paper. The handwriting was on the wall for many of these borrowers from the outset. I understand the foreclosure process and the costs associated with it. I believe the cost of an REO falls somewhere along the lines of $50,000 for each property, when all is said and done. It's simple. Many individuals were given the opportunity to purchase homes that they had no business being in. Proper underwriting guidelines and their credit reports show that. The only compassion I have for investors are those that fell victim to blatant fraud on the application, which was inevitable with "The Stated Income Phenomenon."
In regards to your question, "Lender bailout?" I was also addressing those banks that do hold onto "portfolio" paper within my blog.
Yes, the investors were buying subprime paper, until they stopped performing well and their underwriting practices went into question.
The idea is to help those subprime borrowers that have not run into trouble and made late payments thus far, but proper underwriting guidelines would show that the increase set for their future payments will get them into hot water.
Who wins? The fundamentals of a free market wins. Those individuals that believe in "affordable housing" once again wins! Those that stayed on the sidelines when they made the rational decision that the real estate and mortgage markets were getting out of hand and "reality" would eventually create a market correction to take advantage of, like the "buyers market" we have now and increasing...that's who wins.
No one would be complaining if home values were still increasing dramatically. The subprime borrower would have simply done a "cash out refinance" once again, to continue making the increased payments they could never afford from the beginning. Doesn't that seem to be the American way? Live beyond your means...Have it now...pay for it later...
My grandparents generation was far different and I have written about our need to go "Back to the Basics"
I suggest that every homeowner that has their home on the market that is "feeling out the market", but really doesn't need or have a desire to sell...take their home off the market. The drop in inventory of those homes alone will help those that are in dire straights to sell.
"the seller's credit goes in the tank"...Umm...It already was in the tank! IE: Subprime Loan.
"Scott, as you are vehemently opposed to the President's proposed plan, what is your proposed solution?"
I propose we let the free market correct itself as addressed in the comment below yours and in my blog. Underwriting guidelines have strickened lately, due to Wall Street pressures for better underwriting practices. The influx of foreclosures on the market will ultimately drive home values down to where they should be...I.E. Supply and Demand.
Once the prices of homes become more realistic, they will once again sell!
Unfortunately, this will need to be a lesson to many. Especially those that had a "falsified sense of net worth" and had a field party until ultimately...the piper gets paid...
Hopefully, they learn from it. Otherwise, if you keep doing what you're doing...you'll keep getting what you're getting.
You state, "Most likely, the great majority of them and/or the lender fudged to secure the loan in the first place, and now they would need to come forward with their info?"
I agree with this statement and it's worth noting. Many loan officers and borrowers did "fudge" on their applications.
Many of the "salesman" loan officers are all but gone with the professional loan officers remaining. Regardless of who did the "fudging", the borrower signed the 1003 at closing, clearly seeing his/her income stated on the application. This is where I feel for investors. The "Stated Income Phenonomen" wreaked havoc on the mortgage industry when it was allowed for wage earners. The product only has it's place for self-employed borrowers with 680+ FICO scores...period.
I think I need to stress this one point again from the blog above to some comments posted~
"Trust that I have compassion for families that are set to lose their homes. Certainly, no one likes to see that and it is bad for the psyche of our country. But a "rate freeze" doesn't enable the person that made bad choices to make better ones. In fact, it only breeds more bad decisions by rewarding bad past decisions." ~Scott Gormley
The current proposal, while flawed, and a government intrusion into the free market, is still far better than similar plans in the past. If you disagree with the current plan, you must have really disliked the Savings and Loan bail out, and what about the Great Depression freeze on foreclosures?
I don't like the government coming into make hay out of a real problem, especially when the "solution" in fact hurts the market. But I do believe this is a vastly improved scenario.
Does it seem ironic to anyone, that the S&L debacle didn't seem to raise the hairs on our backs too much, when the gov. was actually baling out big financial institutions, and this plan has us all beating our lassie-fair capitalism, when the plan basically helps home owners more than the lender/investor?
Very good post by the way! I may disagree with you, but the post is a good one. I want to look at this from another angle.
This "Bush Plan" is not a law. It isn't even binding. If this plan does nothing other that encourage two sides of a contract (mortgage) to work out what is best for both parties it has done more than any one else has to help. Major lenders sat down with folks from the Admistration and other parties and started to come up with ideas. You said...."The fundamentals of a free market wins." Isn't part of a free market one that allows parties in a contract to re-negotiate that contract? A borrower and an investor always have the right to negotiate and re-negotiate a contract. In this case BOTH the borrower and the INVESTOR can change a losing contract for both of them into a win-win.
When the government gets involved in a labor dispute between a union and management they don't pass laws. They encourage each side to talk about it and come up with a resolution. That is all the Bush Plan does for Sub-prime homeowners and investors, encourage them to talk and resolve the issues.
If I had money invested in real estate mortgages I would want to work something out with the borrowers who paid well but would not be able to soon. I'd rather see if I can hang on to my money and investment by keeping the other sides ability to pay alive. Both sides of the contract loose if the borrower walks away. Both sides can negotiate and find a workable solution if they want to. A free market is thriving in America!
The issue here is for those who have not been crunched yet...will more time allow the home they live in time to appriciate to the point that they can get out from under it. This situation is awful!
Why do I think that this blog has a more political lean than a real message ... if you are against the plan state the facts and your opposition ... don't bash
I too have a tough time with the plan ... but I certainly don't see the MBA or NAR doing anything and let's face it ... mortgage brokers and real estate agents made more in this period of time and had more to do with the mess we are in than the government.
The plan is a bandage that will only slow the bleeding but it is needed in order to let things happen at a more natural or steady level in order to avoid a pandenmic from borrowers. The government does not want recession. This plan along with the rate cuts of yesterday and the capital infusion to the credit markets announced today are all meant to stop a recession.
Don't dig too deep into a political agenda. I don't have one. I voted for Bush and I support him on several things. This is simply a topic that needs to be put out there for the Real Estate/Lending Industries to digest.
If there was an agenda, it was to ask simple questions to promote a good comment string to seek answers and "stir the pot" for solutions.
Scott- This is a great post with lots of info.. the problems with the freeze are too many to count and I suspect it will never get off the ground. I don't see how you can suddenly change the terms of the securities packages and expect to see confidence in future markets.. Personally I think it just an all round bad plan
Great Blog everyone..the information takes awhile to digest. I am disappointed in Bush's bailout for the simple reason it is going to prolong this housing and sub-prime debacle. However if a neighbhor of mine can not pay his new adjusted sub prime rate, he is foreclosed on, my property asset goes down too.
Nice Blog and I think you have brought up some good questions. There is one area of the freeze that Bush wants to put into play and has me most concerned about and that has to do with the fact that he wants to be able to change the terms of a mortgage contract that is suppose to be a binding document.
If this goes into play, it makes me wonder about the validity of all mortgage contracts. Will they all have the tendency to become null and void at anytime in the future if and when the government takes it upon themselves to step in to protect their own interests and that of the banking system. This is one area which could be headed for many law suits by investors that has not yet been addressed by the Bush Bunch.
Hi I am one of those homeowners that rate reset in Jan 1 2008 and I asked my Mortgage company Wellsfago for help when I found out that I couldn't refi in Nov 4 ,2007 i had to wait I did have a prepayment penalty on the the fix-rate which turned into an Arms. I am current never late on my mortgage I asked for the rate freeze I got a run around about that and then I was told I didnt qualify because something about they knew what the rate was going to be 45 days before the rate reset on Jan 1, 2008 so there for I dont qualify. Is there anyone that can give me some advise I am waiting for a hear about the loan modification that i put in for but i dont make enough for this new payment of 3,333.03 at a 9.75 rate I was at a 6.5 2,456.00 which I could pay.
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