Proposals include easing bankruptcy rules, shielding banks from lawsuits and providing government assistance to homeowners facing foreclosure.
- Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, has proposed the creation of a federal corporation, funded with as much as $20 billion, to buy distressed mortgages and help struggling homeowners refinance into affordable loans.
- The federal Office of Thrift Supervision, a division of the Treasury Department, is drafting a plan to help borrowers who owe more on their mortgages than their homes are worth.The plan would allow an estimated 8 million homeowners with “upside-down” mortgages to refinance into government-backed loans covering the home’s current value. To make up the difference, lenders would receive a special certificate equivalent to the remainder of the balance owed that they could redeem if the home were eventually sold at a higher price.
- On Thursday, the House Committee on Oversight and Government Reform will scrutinize the compensation and retirement packages of one chief executive and two recently deposed CEOs of companies ensnared in the mortgage crisis. The witness list includes: Angelo Mozilo of Countrywide Financial Corp., the nation’s largest mortgage lender; Stanley O’Neal, formerly of Merrill Lynch & Co.; and Charles Prince, formerly of Citigroup Inc.
- In the House, lawmakers are considering whether the federal government should shield banks from lawsuits brought by investors whose holdings of mortgage securities are negatively affected by changes in loan terms or other measures intended to help at-risk borrowers. The plan was first put forward by Rep. Mike Castle, R-Del., but appears to have attracted support from key House Democrats.
Source: Associated Press
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The Dodd and OTS plans are simply transferring the subprime risk from the banks to the taxpayers. In essence, making the taxpayer the subprime lender of choice. Not a good idea at all.
The Castle plan will render written contracts useless. Further it puts the banks above the law. Yet another terrible idea.
I sincerely hope the Oversight Committee leads to a parade of Mozilo, Prince and O’neal, in handcuffs, on their way to life prison sentences.
All these actions will do is foster false hope that something is being done about the credit and real estate meltdowns. In response to the false hope, the stock market will rise as will interest rates, which will further aggravate our delicate situation. Meanwhile, nothing has been done to fix the problem and the markets have stalled the inevitable “adjustments” needed to move beyond this crisis.
I am frustrated that everyone is worried about the investors when the ones who are at fault with the problem foreclosure are those such as Litton Loan Servicing. An example is in my case. Litton is added fees to my loan which are taking out of payments which should be going to the loan and not to them. Example. A woman I know paid Litton 2500 dollars to catch up her loan which she got behind because she had cancer. She called Litton and they told her that is what she owed. She then received a notice of foreclosure a month later. Saying she is 3200 behind. When she looked at her statement she noticed the 2500 was disperse in this way. Instead of three payments which would have caught her loan up, they paid only one. Then 700 went to forebearance fee (which she was not under a forebearance plan and 1200 went to coorporate fees. None of this 1900 went to the payment of her home but to Litton Loan who does not own the note but represents an investor who owns the note. What is wrong with this picture you ask? Well lets see, not only will the investor have lost because the loan will go into foreclosure but will also lose when my friend files for chapter 7 bankruptcy. So if you want to get the fraudulent company – look up litton loan and you will not believe all you read. Many homeowners in Ohio, Michigan, Texas and many other states have loans of investors through Litton. Lets be fair to everyone and shut down Litton. They need held accountable for everything they have done. Lying, cheating, stealing, etc etc. Time for our government to put them to rest and make them accountable for putting investing and homeowners at risk. And the economy and those middle class are the ones who have to foot the bill. All loans litton has should be paid in full and investors and homeowners should be the winners.
Dear Federal Office of Thrift Supervision:
Home owners who owe more than the current value of their homes should continue to pay their loans, as they agreed to do. The owner would expect to get the full value of the increase if the value of their house went up. If it goes down, they should not expect someone to guarantee themselves against loss.
To any remaining free Americans:
Very soon, nearly every home in America that was purchased using a mortgage in 2004-2006 will be “under water”. All of these loans will be turned over the federal government under the suggestion of this federal agency that wants to expand. The point of all of this is to nationalize the home mortgage business.