No to Interest-Only Mods
The Mortgage Investors Coalition, a trade group of asset managers holding more than $100bn in residential mortgage-backed securitizations (RMBS) on behalf of pension funds, college endowments, and other investors, is calling on the Treasury Department to reject a proposal to offer distressed borrowers interest-only payments for a certain length of time as part of the terms of a Making Home Affordable Modification Program (HAMP) workout. The coalition said the proposal fails to address the issue of negative equity, and that it is not in the best interest of the housing industry and consumers. Modifying homeowners into mortgages that have future payment increases and adjustable interest rates will not improve a homeowners situation, said Micah Green, a partner at Patton Boggs and coalition spokesman. Doing so would ignore the fact that many of these homeowners are already in interest-only or other non-traditional mortgages and owe more on their mortgage than their home is currently worth
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