Stop Foreclosure.
The Wall Street Journal reported: "As a result, the much-vaunted federal "Hope for Homeowners" program launched in October has been only a limited success. The program is supposed to facilitate new mortgages for homeowners if lenders agree to reduce the amount of money owed on a home to 90% of its assessed value. The program went into effect with the goal of helping hundreds of thousands of homeowners. To date, it has processed less than 400 applications.
To those who claim that my bill will end up harming consumers by increasing the cost of credit, I would respectfully suggest that they are not taking account of the track record of the modern-day bankruptcy code.
For more than three decades, the bankruptcy code has permitted the very kind of court modification we are considering today, for every other form of secured debt, including loans secured by second homes, investment properties, luxury yachts, and jets. For over 20 years, this very kind of modification has been available for home mortgages already -- if the home is a family farm. There is no indication that this has in any way increased the cost of credit for any of these kinds of loans.
As for my legislation, we have narrowed it to apply only to existing mortgages. So it will have no effect on new mortgages and cannot impact their cost. This is one reason why Citigroup is now among the many business and consumer groups that support this proposal. It's also one reason why the Obama administration supports my bill".
Thanks to stop freclosue for having me back. I wanted to start the week talking about how poor mortgage servicing is paving the path for a new breed of predators and how little is being done to address the situation. Homeowners facing foreclosure have always been vulnerable to scammers, con-artists, and thieves. As soon as an impending foreclosure becomes public information, homeowners are bombarded with post cards, telephone calls and even door-to-door solicitations from would be saviors. When property values were appreciating rapidly, foreclosure rescue scams primarily focused on obtaining title to the home and robbing homeowners of their equity. Today with property prices depreciating and many homes already “underwater,” equity is no longer the game. Instead, rescuers have become high-volume, “loan modification specialists.” A recent editorial in the New York Times (here) and an article from BusinessWeek (here) describe this business that is now booming across the country. The gist of the business model is that for a fee, which can reach several thousand dollars, these specialists will attempt to obtain a loan modification for the borrower. But why are homeowners giving their precious dollars to loan modification specialists when they should be able to obtain the same results for no charge?
|
