Bush Proposes Subprime Mortgage Reform

[JRScott]

This can affect those as much as 3 months behind in their mortgages and I thought of interest. It will take some time to wind through congress of course and could change.

http://www.foxnews.com/story/0,2933,295369,00.html

[lrprn]

This can affect those as much as 3 months behind in their mortgages and I thought of interest. It will take some time to wind through congress of course and could change.

Thanks for posting the link, JR. My guess is that by the time Bush and/or our Congress actually does anything, it will be far too late for those involved the sub-prime mortgage crash now.

Unfortunately the sub-prime lending situation is likely to create a lot of public hand-wringing, but not much (if any) real action. The time to prevent this mess was years ago, but nothing was done because everyone who could have done something was either drowned out or benefitting from the obscene profit deluge themselves. Too little, too late to be thinking about effectively helping people caught up in this disaster now. Best we can hope for is to prevent it from happening again in the future.

[jane taylor]

Well said, LPRN. We are in the middle of trying to sell our home now as the interest rate spiked again. We have also had our attorney file a motion to abandon in case it does not sell.

It is SO incredibly hard to lose your home. Although I am a person of faith and it is my belief that my home in heaven will be a mansion, it does not make this any less stressful. It hurts and is embarrassing.

You are exactly right. It is true "An ounce of prevention is worth a pound of cure."

jane

[DeadManCrawling]

Stunningly RIDICULOUS

Looking at the news about the proposed "Help for Homeowners" being chucked around, I saw this:


A key element of Bush's plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.

What in the heck are the chances that "someone who cannot afford their mortgage" is going to have "good credit history"?

Totally laughable. That will probably affect one lady in Hoboken, who they will parade endlessly on television as "proof that help is on the way"--and later, "proof that your elected leaders DID something-and it worked."

Our mortgage payment is perfect-never missed one. However, part of the reason we were perfect is that we had to stop paying credit cards, effectively trashing our "good credit."

Is there anyone on this board who might be helped by this? I doubt it. Even off the board-if you can't make your mortgage payment, that would also destroy your credit rating pretty swiftly.

Unless there is more to this that analyzes other factors, I see this as an exercise in utter futility.

Talk about watching the ship burn while tossing buckets of water overboard.

best wishes

-dmc

[SinkingFast]

For future reference,.............. In case the link gets broken or somewhere down the road, Fox News takes the story down.

Bush Proposes Subprime Mortgage Reforms

Friday, August 31, 2007

WASHINGTON — President Bush on Friday outlined ways to help homeowners facing foreclosure — the administration's first effort to deal with an expected wave of defaults fueled by the mortgage crisis.

The initiatives, which are not aimed at bailing out lenders or speculators, are designed to help homeowners with risky mortgages keep their houses. In remarks in the Rose Garden, Bush also discussed efforts to keep the problems from arising in the future.

"The government's got a role to play, but it is limited," Bush said. "A federal bailout of lenders would only encourage a recurrence of the problem."

The president insisted that the U.S. economy was strong and could weather recent turbulence in the financial markets. He said the mortgage market, especially the subprime sector, has shown particular strain. One of the most troubling developments has been an increase in adjustable-rate mortgages, which start out with low interest rates, then reset to higher rates after a few years.

"This has led some homeowners to take out loans larger than they could afford based on overly optimistic assumptions about the future performance of the housing market," Bush said. "Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure."

A key element of Bush's plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.

Earlier this month, Bush predicted that the ongoing decline in the housing market wouldn't become precipitous, but would result in a "soft landing."

He rejected any direct government aid to homeowners losing their houses to foreclosures, saying he only supported federal government help that would encourage refinancing and educate prospective home buyers about risky mortgage terms

"Anybody who loses their home is somebody with whom we must show enormous empathy," the president said at an Aug. 9 news conference. "The word `bailout,' I'm not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no, I don't support that."

On Friday, Bush:

— Urged Congress to pass legislation that would give the Federal Housing Administration more flexibility to help mortgage holders with subprime mortgages.

— Pledged to work with Congress to reform the tax code to help troubled borrowers rework their loans.

— Called for rigorously enforcing predatory lending laws and strengthening lending practices.

Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their homes.

Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches.

The economy enjoyed a strong revival in the spring although growing troubles in housing and credit markets have darkened prospects considerably since then. The Commerce Department reported Thursday that the gross domestic product grew at an annual rate of 4 percent in the second quarter — the strongest showing in more than a year.

But that growth could be the best showing for some time as the economy continues to be battered by the worst housing slump in 16 years and a widening credit crisis that has sent financial markets on a roller-coaster ride in recent weeks.



I have to agree with Lrprn. Look how long it took to get "BK Reform" accomplished. Congress had worked on that for something like 8 years before the New Law passed.

It's a good sound bite, but probably won't happen soon enough for many folks who need help NOW. Or a year or 2 or 3 from now.

[Boscoe]

Don't get me going on the "Worst President Ever". Aside from presiding over debacle after debacle (Iraq, Katrina, Alberto Gonzales, etc. etc.), he signed this piece of crap bk legislation into law in April 2005, saying something like "This bill will ensure that everyone who can pay their bills will do so".

Out of touch like usual. His greedy bastard republican lobbyists were set to gain the most from this.

Only 17 more months until 1-20-09......

[Tatetytiffany]

Mr Bush

Bush Moves to Aid Homeowners

WASHINGTON -- President Bush, looking for ways to respond to the subprime-mortgage crisis, will outline a series of policy changes and recommendations today to help borrowers avoid default, senior administration officials said.

Among the moves will be an administrative change to allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to guarantee loans for delinquent borrowers. The change is intended to help borrowers who are at least 90 days behind in payments but still living in their homes avoid foreclosure; the guarantees help homeowners by allowing them to refinance at more favorable rates.

Mr. Bush also will ask Congress to suspend, for a limited period, an Internal Revenue Service provision that penalizes borrowers who refinance the terms of their mortgage to reduce the size of the loan or who lose their homes to foreclosure. And he will announce an initiative, to be led jointly by the Treasury and Housing and Urban Development departments, to identify people who are in danger of defaulting over the next two years and work with lenders, insurers and others to develop more favorable loan products for those borrowers.

The moves are the first visible steps the Bush administration has taken to help stem the fallout from the subprime crisis, which has roiled financial markets and threatened to contaminate the housing sector. Defaults and foreclosures are increasing as borrowers -- many of whom got interest-only or no-money-down loans -- begin having trouble making their mortgage payments as higher rates kick in. Many homeowners believed they could refinance their loans, but that has become much harder as lenders tighten their standards in the face of defaults and foreclosures.

....

For now, the administration's primary vehicle to help homeowners will be the FHA, which doesn't originate loans but helps riskier borrowers qualify by guaranteeing their loans against default. By allowing the agency to back loans for delinquent borrowers, the FHA estimates it can help an additional 80,000 homeowners qualify for refinancing in 2008, bringing its total of refinancing guarantees to about 240,000, senior administration officials said. Mr. Bush also plans to announce that the FHA will begin charging "risk-based" premiums, a move that will enable the agency to help riskier borrowers since they can charge those individuals higher insurance rates. Right now, FHA premiums are a flat 1.5% of the loan, and the change would give the FHA flexibility to charge some borrowers as much as 2.2%.

Still, the move will help only a small portion of homeowners -- and few in high-cost states such as California or New York -- because the FHA faces constraints on the size of the loans it can back and strict rules that borrowers must meet. The Bush administration has been pushing Congress to enact overhauls that would eliminate the required 3% down payment and raise the size of the loans the FHA can insure to as much as $417,000 from $362,790. Senate Banking Committee Chairman Christopher Dodd (D., Conn.) said recently that FHA reform will be among his priorities when Congress returns from its August recess, and a bill is expected to head to the full House this fall.

In another move, Mr. Paulson and HUD Secretary Alphonso Jackson have instructed their staffs to begin working with mortgage lenders and others to identify borrowers who are in danger of defaulting. They also are trying to work with private lenders and mortgage giants Fannie Mae and Freddie Mac to develop loans for borrowers who will likely face default if they can't get more flexible terms.

[email link to news story author removed by moderator]
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Probably to late for me but hopefully this will help someone else if it gets passed.

[JRScott]

I actually believe Bush's motives are political. He's being pressured by the other Republicans I think.

The problem is the federal government doesn't have the funds to bail out the sub prime market much like it doesn't have the funds to pay all the entitlement programs past beyond the next ten to fifteen years. I think the market would fix itself without government interference, all this will do is encourage more shady lending because the government will bail us out mentality.

I think it is good for those that can refinance, but I think it would have been better for these companies who made this mess to have come clean and approached their customers and fixed the problem themselves by refinancing better terms that their customers could afford. Yes that would mean less profits for the corporations involved but that's their fault, they knew when they made most of the sub prime loans that ultimately as many as half of those people would default. They didn't care, they counted on the increased housing prices to eventually make it so that they could foreclose and resale and make even more profit. However now the market has been in decline and most of the homes are not worth the original loan amount anymore. It was greed pure and simple. Greed on the part of predatory lenders.

[HelpThisGirl]

My sister doesn't make enough money to afford her payments and is struggling but she has 750 scores.

Looking at the news about the proposed "Help for Homeowners" being chucked around, I saw this:


A key element of Bush's plan would allow homeowners with good credit histories, but who cannot afford their mortgage payments, to refinance into mortgages insured by the Federal Housing Administration to keep from defaulting.

What in the heck are the chances that "someone who cannot afford their mortgage" is going to have "good credit history"?

Totally laughable. That will probably affect one lady in Hoboken, who they will parade endlessly on television as "proof that help is on the way"--and later, "proof that your elected leaders DID something-and it worked."

Our mortgage payment is perfect-never missed one. However, part of the reason we were perfect is that we had to stop paying credit cards, effectively trashing our "good credit."

Is there anyone on this board who might be helped by this? I doubt it. Even off the board-if you can't make your mortgage payment, that would also destroy your credit rating pretty swiftly.

Unless there is more to this that analyzes other factors, I see this as an exercise in utter futility.

Talk about watching the ship burn while tossing buckets of water overboard.

best wishes

-dmc