Here is a follow up to my post yesterday titled Should We Bail?
I was reading that Fannie Mae and Freddie Mac are both working on programs designed to keep people from going into foreclosure. At this point, no specific details are available. Most of the loan amounts in my area, Walnut Creek, Lafayette, and so on are considerably higher than the $417,000 conforming limit, so I don't know how much benefit the new programs may be. Only time will tell.
I also just received a press release from the Federal Reserve Board, encouraging the lenders and institutions to work with troubled borrowers.
Will they? We'll all have to wait and see on that as well.
I do have some evidence that they might.
I related in a post on a commercial refinance I was working on that was impossible to fund (http://activerain.com/blogsview/73167/Somebody-is-going-to).
I called the lender on behalf of the borrower and explained their situation. The lender is putting a package together for her to complete.
Once completed the lender is going to respond with one or more options:
- Extend the term in years (thereby reducing the monthly payment),
- Lower the interest rate,
- Restructure to allow a temporary lower payment while she tries to sell.
In my past experiences I can tell you I've not seen or heard of a lender so willing to compromise like that. Of course we'll have to wait and see what they offer. As they say, the proof is in the pudding.
Here's a link to the Press Release: http://www.federalreserve.gov/boarddocs/press/bcreg/2007/20070417/default.htm
as well as the statement itself: http://www.federalreserve.gov/boarddocs/press/bcreg/2007/20070417/attachment.pdf
My question at this time is...
Is this the FOMC's way of a hint, or is this more of a C.Y.A. type of thing?
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