Mortgage investors may sue on modified loans

[Care4all]

then i think the people in the story have a point
no?

Yes, I think they do have a point. But they aren't making many friends in the process. Being "right" doesn't always make you right. This will help people keep their homes and investors will still get paid. Stopping this to make a few extra bucks doesn't exactly make these investors look good.

No one is complaining about modifying the mortgages of those who are in default or in imminent danger of going into default. Obviously, modifying that mortgage will benefit everyone, but Obama's plan will pay mortgage servicers to modify the mortgages of anyone whose monthly payment is more than 31% of their income even if they are paying on time and are in no imminent danger of default. The cases the investors are threatening to sue about have nothing to do with keeping people in their houses.

And this is not an oversight. In the FAQ sheet Treasury put out they specifically advise people to apply for mortgage modification even if they are not in danger of default if their monthly payment is more than 31% of their income. This is what the investors are pissed off about.

BUT if they didn't do this, then those paying their mortgage would just STOP paying it so they could get in trouble so they could qualify....?

 

[manu1959]

Yes, I think they do have a point. But they aren't making many friends in the process. Being "right" doesn't always make you right. This will help people keep their homes and investors will still get paid. Stopping this to make a few extra bucks doesn't exactly make these investors look good.

No one is complaining about modifying the mortgages of those who are in default or in imminent danger of going into default. Obviously, modifying that mortgage will benefit everyone, but Obama's plan will pay mortgage servicers to modify the mortgages of anyone whose monthly payment is more than 31% of their income even if they are paying on time and are in no imminent danger of default. The cases the investors are threatening to sue about have nothing to do with keeping people in their houses.

And this is not an oversight. In the FAQ sheet Treasury put out they specifically advise people to apply for mortgage modification even if they are not in danger of default if their monthly payment is more than 31% of their income. This is what the investors are pissed off about.

BUT if they didn't do this, then those paying their mortgage would just STOP paying it so they could get in trouble so they could qualify....?

yep.....they rolled out state funded health care in hawaii....guess what happened.....

 

[DiveCon]

Yes, I think they do have a point. But they aren't making many friends in the process. Being "right" doesn't always make you right. This will help people keep their homes and investors will still get paid. Stopping this to make a few extra bucks doesn't exactly make these investors look good.

No one is complaining about modifying the mortgages of those who are in default or in imminent danger of going into default. Obviously, modifying that mortgage will benefit everyone, but Obama's plan will pay mortgage servicers to modify the mortgages of anyone whose monthly payment is more than 31% of their income even if they are paying on time and are in no imminent danger of default. The cases the investors are threatening to sue about have nothing to do with keeping people in their houses.

And this is not an oversight. In the FAQ sheet Treasury put out they specifically advise people to apply for mortgage modification even if they are not in danger of default if their monthly payment is more than 31% of their income. This is what the investors are pissed off about.

BUT if they didn't do this, then those paying their mortgage would just STOP paying it so they could get in trouble so they could qualify....?

and thats the mess the CRA DID help cause

 

[toomuchtime_]

No one is complaining about modifying the mortgages of those who are in default or in imminent danger of going into default. Obviously, modifying that mortgage will benefit everyone, but Obama's plan will pay mortgage servicers to modify the mortgages of anyone whose monthly payment is more than 31% of their income even if they are paying on time and are in no imminent danger of default. The cases the investors are threatening to sue about have nothing to do with keeping people in their houses.

And this is not an oversight. In the FAQ sheet Treasury put out they specifically advise people to apply for mortgage modification even if they are not in danger of default if their monthly payment is more than 31% of their income. This is what the investors are pissed off about.

right, which brings in a whole nother group of people
and makes the potential loss that much greater

anyone owing a mortgage more than 31% of their income is considered high risk....no?

So, even if they are paying it now, foreclosure could be here a year from now with them....

so i am just guessing, but maybe this is good because it stops this continual drip drip drip of foreclosures and uncertainty of the housing market getting worse as the years continue on....?

to a degree i can see why investors would be upset...

but also to a degree i could see how the home owner PAYING his mortgage regularly, which was more than 31% of his income be pissed that he did not get the chance to refinance and the guy who DID NOT PAY his mortgage on time could....etc.

what a mess! a real mess!

This part of the plan is not about refinancing at market rates. If the mortgage company chooses to participate, it would first be required to reduce the person's monthly payment to 38% of income, by either lowering the interest rate or forgiving part of the loan, and then the government will step in a split the difference down to 31% of income. In return, the government will pay the mortgage company a cash fee for participating, and it will pay the home owner $1,000 if he/she makes the payments on time for five years, but the person who bought the securities backed by the mortgage sustains a net loss and is paid nothing.

How can this be good policy when Geithner's plan for recapitalizing the banks hinges on persuading private investors to buy these same kinds of securities from the banks?

 

[Annie]

right, which brings in a whole nother group of people
and makes the potential loss that much greater

anyone owing a mortgage more than 31% of their income is considered high risk....no?

So, even if they are paying it now, foreclosure could be here a year from now with them....

so i am just guessing, but maybe this is good because it stops this continual drip drip drip of foreclosures and uncertainty of the housing market getting worse as the years continue on....?

to a degree i can see why investors would be upset...

but also to a degree i could see how the home owner PAYING his mortgage regularly, which was more than 31% of his income be pissed that he did not get the chance to refinance and the guy who DID NOT PAY his mortgage on time could....etc.

what a mess! a real mess!

This part of the plan is not about refinancing at market rates. If the mortgage company chooses to participate, it would first be required to reduce the person's monthly payment to 38% of income, by either lowering the interest rate or forgiving part of the loan, and then the government will step in a split the difference down to 31% of income. In return, the government will pay the mortgage company a cash fee for participating, and it will pay the home owner $1,000 if he/she makes the payments on time for five years, but the person who bought the securities backed by the mortgage sustains a net loss and is paid nothing.

How can this be good policy when Geithner's plan for recapitalizing the banks hinges on persuading private investors to buy these same kinds of securities from the banks?

Seems most aren't:

RealClearMarkets - Print Version

February 20, 2009
The Market Is Shorting Obama's 'Stimulus'

By George Bittlingmayer & Thomas W. Hazlett
President Barack Obama’s “stimulus” plan invokes the 1930s fiscal strategy put forward by British economist John Maynard Keynes, who saw capitalism as pretty much spent. Having exhausted their store of innovative ideas, investors curled up. Workers lost jobs, spent less, and sent still other workers walking. Budget deficits �" government spending without taxes to “pay as you go” - would pull unemployed workers off the street and arrest the downward spiral. Investors’ “animal spirits” would be calmed, new capital risked, and economic vitality restored.

So the Obama theory �" government spending is stimulus. If so, financial markets should feel the love. The U.S. budget is awash in red ink, and $800 billion more of it should easily move the needle on our economic prospects. Indeed it has �" in the wrong direction. Financial markets don’t want more government debt or a scramble for “shovel-ready” spending projects. They want the skeletons in the banking sector’s closet exposed and expunged.
The Bush Economy went up in smoke in September-October 2008. The financial meltdown hit Wall Street, devastating bank equities and laying waste to America’s 401-Ks. The Republican ticket, McCain-Palin, was a 50-50 bet on Sept. 15; by Oct. 15 it was a 5-1 long-shot. Voters saw the carnage: the Dow Jones Index lost 17% of its value from Sept. 2 through Nov. 3. In a flash, Americans lost years of toil, and Republicans the election. Decisively.

The election marked a turning point. Investors looked forward to the economic policies crafted by Democrats in Congress and the White House. More pointedly, they wanted decisive, well-crafted action on the banking crisis. Hence the Dow soared 6.5% Nov. 21 on news that Timothy Geithner, the highly-respected head of the New York Federal Reserve Bank, was Obama’s pick for Treasury Secretary.

Yet, from Nov. 4, 2008 through Feb. 12, 2009, the DJI overall fell 18% -- a larger drop than during the Sept-Oct plunge. In January, when the Obama plan, promising far greater deficits than the two much smaller “emergency stimulus” plans signed by Pres. George W. Bush in 2008, was unveiled, the market tanked �" the worst January performance in 113 years.

More pointedly, key political victories for the Team Obama spending plan have not been viewed as buying opportunities on Wall Street. A string of negative market reactions began with the December 18 announcement of a stimulus bill of $700 billion (Dow down 2.5%), continued with the January 7 announcement that the actual plan would be “on the high side” (-2.7%) and continued with last week’s 61-36 Senate vote supporting the Administration’s fiscal plan. The White House victory and the new bank bail-out plan announced the following day by Treasury Secretary Geithner were met with a 5% wipe-out in the DJI, and a decline in Treasury bond yields, indicating a “flight to quality.”

There are many problems with Keynes’ “stagnationist thesis,” as Joseph Schumpeter called it, not the least of which is that it didn’t test so well when applied by New Dealers. U.S. unemployment was perniciously high throughout the 1930s, peaking at 25% in 1933 but still over 17% in 1939....

 

[Care4all]

right, which brings in a whole nother group of people
and makes the potential loss that much greater

anyone owing a mortgage more than 31% of their income is considered high risk....no?

So, even if they are paying it now, foreclosure could be here a year from now with them....

so i am just guessing, but maybe this is good because it stops this continual drip drip drip of foreclosures and uncertainty of the housing market getting worse as the years continue on....?

to a degree i can see why investors would be upset...

but also to a degree i could see how the home owner PAYING his mortgage regularly, which was more than 31% of his income be pissed that he did not get the chance to refinance and the guy who DID NOT PAY his mortgage on time could....etc.

what a mess! a real mess!

This part of the plan is not about refinancing at market rates. If the mortgage company chooses to participate, it would first be required to reduce the person's monthly payment to 38% of income, by either lowering the interest rate or forgiving part of the loan, and then the government will step in a split the difference down to 31% of income. In return, the government will pay the mortgage company a cash fee for participating, and it will pay the home owner $1,000 if he/she makes the payments on time for five years, but the person who bought the securities backed by the mortgage sustains a net loss and is paid nothing.

How can this be good policy when Geithner's plan for recapitalizing the banks hinges on persuading private investors to buy these same kinds of securities from the banks?

ohhhhhhhhhhhhhhhhhhhh, sorry i was so slow in picking that part up....it's hard for an average jane to understand all of these instruments used in the financial / stock markets....my head is still spinning trying to understand where the actual failures took place in this whole meltdown....

 

[editec]

I find this rather amusing.

If the mortgages are allowed to go into foreclosure the Mortgage investors (bond holders) will get how much, exactly?

NOTHING!

The bonds they purchased have ZERO value because the banks which issued them are BANKRUPT because the mortgages they wrote are failing to proform.

So these bond holders would rather have nothing than half a loaf?!

Fine by me!

Let the banks fail, and let the bond holders lose every cent they were bamboozled into investing in those crappy real estate mortgage backed bonds.

Suits me!

The value of real estate will continue to fall, more banks will find themselves insolvent, even people who have mortgages that are very mature and at fixed rates will find themslves under water and our economy will collapse completely.

This is what the Libertarian/Austrians think is the solution...to take the pain RIGHT now.

And while I personally think that the cure is worse than the disease, they are right about the fact that if we just let the whole damned thing collapse, at least then the system can slowly (very slowly) find it's own values for things like real estate values.

And mark my words, if the Libertarian/Austrian solution is put into place (ie we do nothing) the average value of the median price of a home WILL be somewhere in the neighborhood of the median income of the American family.

Of course there's NO TELLING what the median income in the USA will be when our entire banking system collapses, but hey...that's life isn't it?

 

[Ravi]

right, which brings in a whole nother group of people
and makes the potential loss that much greater

anyone owing a mortgage more than 31% of their income is considered high risk....no?

So, even if they are paying it now, foreclosure could be here a year from now with them....

so i am just guessing, but maybe this is good because it stops this continual drip drip drip of foreclosures and uncertainty of the housing market getting worse as the years continue on....?

to a degree i can see why investors would be upset...

but also to a degree i could see how the home owner PAYING his mortgage regularly, which was more than 31% of his income be pissed that he did not get the chance to refinance and the guy who DID NOT PAY his mortgage on time could....etc.

what a mess! a real mess!

yes, too bad congress passed laws forcing them to MAKE those high risk loans

Why do you keep repeating these lies. The banks were never required to make risky loans. They did that on their own.

 

[editec]

anyone owing a mortgage more than 31% of their income is considered high risk....no?

So, even if they are paying it now, foreclosure could be here a year from now with them....

so i am just guessing, but maybe this is good because it stops this continual drip drip drip of foreclosures and uncertainty of the housing market getting worse as the years continue on....?

to a degree i can see why investors would be upset...

but also to a degree i could see how the home owner PAYING his mortgage regularly, which was more than 31% of his income be pissed that he did not get the chance to refinance and the guy who DID NOT PAY his mortgage on time could....etc.

what a mess! a real mess!

yes, too bad congress passed laws forcing them to MAKE those high risk loans

Why do you keep repeating these lies. The banks were never required to make risky loans. They did that on their own.

Perhaps she is doing that because if the value of real estate continued to fall, then even those of us with mortgages which were NOT NINA's will find themselves under water?

Being under water has nothing to do with what kind of loan you got.

It merely means that the current market value of your home is lower than what you currently owe on it.

You can have a 10 year old mortgage, one that you have been paying on all along, one that you put down 20% on, one that is set at a fixed rate, too and STILL be under water...IF the price of real estate continues to fall.

The NINA loans which started this mess are not the only loans that are now getting into trouble.

 

[Care4all]

yes, too bad congress passed laws forcing them to MAKE those high risk loans

Why do you keep repeating these lies. The banks were never required to make risky loans. They did that on their own.

Perhaps she is doing that because if the value of real estate continued to fall, then even those of us with mortgages which were NOT NINA's will find themselves under water?

Being under water has nothing to do with what kind of loan you got.

It merely means that the current market value of your home is lower than what you currently owe on it.

You can have a 10 year old mortgage, one that you have been paying on all along, one that you put down 20% on, one that is set at a fixed rate, too and STILL be under water...IF the price of real estate continues to fall.

The NINA loans which started this mess are not the only loans that are now getting into trouble.

Ed, I think Ravi was talking to Divecon on that and not me.....

 

[editec]

too much time posits:

but the person who bought the securities backed by the mortgage sustains a net loss and is paid nothing.

Nothing? the bond holders are paid NOTHING?

Where did you hear that?

As far as I understand things the whole reason we're doing this bailout is to protect the bond holders from the banks (which issued those bonds) going down.

 

[toomuchtime_]

too much time posits:

but the person who bought the securities backed by the mortgage sustains a net loss and is paid nothing.

Nothing? the bond holders are paid NOTHING?

Where did you hear that?

As far as I understand things the whole reason we're doing this bailout is to protect the bond holders from the banks (which issued those bonds) going down.

You should call the White House right away because they seem to be unaware the housing plan is intended to benefit the investors who hold these debt backed securities.

 

[editec]

too much time posits:

but the person who bought the securities backed by the mortgage sustains a net loss and is paid nothing.

Nothing? the bond holders are paid NOTHING?

Where did you hear that?

As far as I understand things the whole reason we're doing this bailout is to protect the bond holders from the banks (which issued those bonds) going down.

You should call the White House right away because they seem to be unaware the housing plan is intended to benefit the investors who hold these debt backed securities.

Yeah, so you say.

Now can you prove that with some clarification of why the first thing they did was save the banks from becoming insolvent?

Here's what I think, 2much...I think you are somewhat confused.

But I'm more than willing to admit that I am wrong, if you can show me evidence that the bond holders will get nothing under this bailout.

That truly does run counter to my understanding of the plan.

 

[Ravi]

Maybe this is a dumb question, but isn't investing inherently risky? Is anyone guaranteed a profit from investing in anything?

 

[toomuchtime_]

too much time posits:



Nothing? the bond holders are paid NOTHING?

Where did you hear that?

As far as I understand things the whole reason we're doing this bailout is to protect the bond holders from the banks (which issued those bonds) going down.

You should call the White House right away because they seem to be unaware the housing plan is intended to benefit the investors who hold these debt backed securities.

Yeah, so you say.

Now can you prove that with some clarification of why the first thing they did was save the banks from becoming insolvent?

Here's what I think, 2much...I think you are somewhat confused.

But I'm more than willing to admit that I am wrong, if you can show me evidence that the bond holders will get nothing under this bailout.

That truly does run counter to my understanding of the plan.

So your understanding of the plan is that since Bush passed TARP before Obama announced his housing plan it is obvious to you that Obama's intent is to save investors who bought debt backed securities?

Most people seem to believe Obama's intent was to help some homeowners to stay in their homes and some even believe the intent was to try to stabilize the housing market, but you have apparently recognized the fingerprints of the Bush administration - members all, no doubt of your "master class" - all over Obama's plan - Obama no doubt having at least fellow traveler status in your "master class" fantasy - and that has led you to believe the true intent of the housing bill was to benefit owners of debt backed securities.

Had you bothered to read the plan and been able to understand it you would have understood that under the mortgage modification part of the plan both the mortgage company and the borrower, who need not be in danger of default to qualify, will receive cash incentives to reduce the value of the loan and by reducing the value of the loan they will be reducing the value or the securities backed by the loan. That this will reduce the value of the debt backed securities is so clear to Congress that Frank, with Obama's blessing, will try to pass a law preventing investors from suing mortgage companies to prevent or to recover any losses that result from these actions.

 

[DiveCon]

anyone owing a mortgage more than 31% of their income is considered high risk....no?

So, even if they are paying it now, foreclosure could be here a year from now with them....

so i am just guessing, but maybe this is good because it stops this continual drip drip drip of foreclosures and uncertainty of the housing market getting worse as the years continue on....?

to a degree i can see why investors would be upset...

but also to a degree i could see how the home owner PAYING his mortgage regularly, which was more than 31% of his income be pissed that he did not get the chance to refinance and the guy who DID NOT PAY his mortgage on time could....etc.

what a mess! a real mess!

yes, too bad congress passed laws forcing them to MAKE those high risk loans

Why do you keep repeating these lies. The banks were never required to make risky loans. They did that on their own.

because its NOT a lie you fucking moron
its what got the snowball rolling
get your head out of your ass and see reality for a change

 

[DiveCon]

Why do you keep repeating these lies. The banks were never required to make risky loans. They did that on their own.

Perhaps she is doing that because if the value of real estate continued to fall, then even those of us with mortgages which were NOT NINA's will find themselves under water?

Being under water has nothing to do with what kind of loan you got.

It merely means that the current market value of your home is lower than what you currently owe on it.

You can have a 10 year old mortgage, one that you have been paying on all along, one that you put down 20% on, one that is set at a fixed rate, too and STILL be under water...IF the price of real estate continues to fall.

The NINA loans which started this mess are not the only loans that are now getting into trouble.

Ed, I think Ravi was talking to Divecon on that and not me.....

yes, she was
but shes too fucking stupid to understand that when groups like ACORN at taking banks and mortage companies to court that it will change the way they do business
even though the claim of only 6% were filed under CRA, it effected OTHER loans that the financial business didnt want to be taken to court


how anyone can be so fucking stupid to NOT see the results is beyond me

 

[Ravi]

yes, too bad congress passed laws forcing them to MAKE those high risk loans

Why do you keep repeating these lies. The banks were never required to make risky loans. They did that on their own.

because its NOT a lie you fucking moron
its what got the snowball rolling
get your head out of your ass and see reality for a change

I asked this in another thread. Show me the verbiage in this law you claim forced banks to make high risk loans.

 

[Ravi]

Perhaps she is doing that because if the value of real estate continued to fall, then even those of us with mortgages which were NOT NINA's will find themselves under water?

Being under water has nothing to do with what kind of loan you got.

It merely means that the current market value of your home is lower than what you currently owe on it.

You can have a 10 year old mortgage, one that you have been paying on all along, one that you put down 20% on, one that is set at a fixed rate, too and STILL be under water...IF the price of real estate continues to fall.

The NINA loans which started this mess are not the only loans that are now getting into trouble.

Ed, I think Ravi was talking to Divecon on that and not me.....

yes, she was
but shes too fucking stupid to understand that when groups like ACORN at taking banks and mortage companies to court that it will change the way they do business
even though the claim of only 6% were filed under CRA, it effected OTHER loans that the financial business didnt want to be taken to court


how anyone can be so fucking stupid to NOT see the results is beyond me

What a retard. You don't have the smallest idea about anything.

 

[DiveCon]

Why do you keep repeating these lies. The banks were never required to make risky loans. They did that on their own.

because its NOT a lie you fucking moron
its what got the snowball rolling
get your head out of your ass and see reality for a change

I asked this in another thread. Show me the verbiage in this law you claim forced banks to make high risk loans.

acorn sues banks - Google Search