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BoA (Countrywide) Moratorium on Foreclosures

By
Mortgage and Lending with Capital Line Funding Group

A California group going by the name of The California Reinvestment Coalition, has asked Bank of America, who is in the process of acquiring Countrywide Financial (the deal hasn't closed yet), to place a moratorium on the properties that are in foreclosure or going into foreclosure by modifying the loans and maintaining the interest rate at 6%.  I think that is a Great idea.  We need to stabilize the real estate market - NOW.

Please get over the argument that the taxpayer will be bailing out borrowers who shouldn't have been qualified for the loan; that falls under shoddy lending practices (i.e. predatory lending).  While there is truth to that, if we don't stop the hemorrhaging at the bank than it's an absolute guarantee the taxpayer will participate in the bailout.  Remember the S&L bailout and Charles Keating?  This should be mandatory reading for any person in real estate or lending as it was the largest bank bailout ever at that time costing the taxpayer $3.4Billion because these S&L's were federally insured.  These loans are NOT in fact even owned by the banks!!!  What????

Recently it was pointed out by the Ohio Federal Court that homes are being foreclosed on by Banks/Trustees when in fact they do not own these properties.  This is just a new wrinkle in the foreclosure process citing necessity for ascertaining ownership before any entity is allowed to foreclose.  It's clearly time to bring on the Moratorium across the board and sort things out - like ownership.

Remember we are talking about "mortgage backed securities" as most loans are securitized within 30 - 60 days and sold on Wall Street.  Very few lenders are "portfolio lenders."  Portfolio Lenders retain the loans.

Additionally there is confusion as to the origin of these loans in question when the "talking heads" start throwing around "taxpayer bailout."  At this point in time we are dealing with conventional loans made by lenders with ultra liberal lending guidelines prodded on by their wealthy Wall Street investors (pardon me I am being kind to these greedy creeps).  They are not FHA loans, they are conventional loans and therefore not government insured.  Mortgage Backed Securities are insured but not by the government.  And the 100% LTV loans have PMI so I am really questioning who is on the losing end?

Rather than speculate while the other shoe is left to fall, insurance companies who insured these properties and securities (another story to write about), lets move forward.

Regardless of the loan origin, it's clearly not in any homeowners best interest to continue the free fall in property values.  Common sense dictates negotiation with troubled homeowners and move on.  Six percent is a decent interest rate and beats 0% on a non performing asset on the books.  Mistakes were made by both lender and borrower, lets not compound them further.

Bottom line, I'd rather see the homeowner retain the home than have blocks of vacant properties picked up by the "Investor" type who started the whole thing in the first place. 

Flipping properties was harmful to the economy; it destroyed the lives of many hard working people who wanted to own the American Dream - a home.  Their lives have been shattered by greed.  I am deeply saddened by this.  But I will not shed a tear or lose a second of sleep over the greedy miserable investor who got stuck with property.  Now let's not let history repeat itself so quickly.

I am a Capitalist and it works in our society, my motto is "Always leave something on the table for the other guy." 

 

 

   

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