By Moe Bedard
While the cramdown bill dies, providing evidence of our representative’s willingness to sell us out, some may say that our representatives have already passed legislation to help Main Street like the foreclosure bill and the Hope for Homeowners plan. Whereas it may seem like these two programs are designed to help us, upon further analysis I think most people will understand that they were, and are designed to shield lenders from greater problems. Political slight of hand is always an interesting topic and as it pertains to the foreclosure prevention plan here’s how it works:
The legislature, working closely with major lobbyists, designs a program that lenders will sign off on and in exchange provides clauses in these bills to shield the entities that caused these problems from greater damage. Today, Mish’s Global Economic Trend Analysis explained that the Obama administration was rolling out more help for homeowners in foreclosure in that second mortgage loan modifications will now be incentivized and subsidized with tax payer money in exchange for more protection for the major banks.
If a bank signs on to the government plan, they may be shielded permanently from lawsuits over fraudulent or predatory loans. So…we give the banks more money (taxpayer money), the banks have to follow government guidelines that do not specify every loan in their portfolio must be modified and in exchange these banks that made bad loans will never have to face a court of law for providing billions of bad loans to unsuspecting consumers.
There’s the slight of hand for you ladies and gentlemen. Perhaps we’re already aware that this has been happening for a long time but has it really been this bad or this blatant? I’m not so sure.
From Mish’s Global Economic Trend Analysis:
Under the new plan, lenders would receive $500 for modifying the second mortgage, plus $250 a year for three years if the loan remains current. The borrower would be eligible for $250 a year for five years to lower their principal balance. The borrower could have the interest rate lowered to 1 percent, depending on the type of loan, with the government sharing the cost of the rate reduction.
“The safe harbor provision protects mortgage servicers from lawsuits alleging misconduct in the past and future,” said Micah Green, a Patton Boggs lobbyist.
[...] Here is the original: A Political Slight of Hand | Loan Modification & Home Loan News [...]