by Jim the Realtor | Apr 22, 2009 | Bailout |
WASHINGTON (Reuters) – The Treasury Department is considering giving banks and investors billions of dollars in fresh incentives to modify troubled mortgages and save homeowners from foreclosure, sources familiar with official deliberations said.
Under one scenario, investors in second liens would receive a cash payment if they agree to ease the terms of troubled loans and accept a smaller return on their mortgage investment, the sources said.
During the height of the housing boom, some borrowers were able to buy a home with no downpayment by adding a second lien and many of those loans are now failing as the economy and housing market struggle.
Some on Wall Street will likely be angry if Washington doles out money to investors who hold the high-risk end of a home loan.
“Second-lien holders should get zero,” said Bill Frey, president of Greenwich Financial Services in Greenwich, Connecticut. “Why should a second lien holder get anything if the first lien holder takes a loss? That’s not the way the contracts work, that’s not the way privatization works, that’s not the way America works.”
OTHER AID
Officials also envision giving fresh subsidies to encourage ‘short sales’ in which the lender accepts a payment that does not cover the entire loan amount, according to the sources, who requested anonymity because they are not authorized to disclose details.
Fannie Mae and Freddie Mac, the mortgage finance companies, would administer the new program to resolve problems with second-liens under one plan being considered, they said.
A senior administration official declined to comment on Tuesday, but said the Treasury expected to unveil further details of its homeowner-aid program “soon.”
The official said the Treasury Department is also considering ways it could resolve problems in the mortgage insurance industry battered by mounting foreclosure losses.
“We are aware of the difficulties in the industry and we are analyzing different options to deal with” those difficulties, the official said.
In February, President Obama outlined a housing rescue plan that he said could move as many as nine million homeowners into more-affordable loans by both refinancing and modifying their current mortgage.
Homeowners normally must settle all of a home’s debts when they refinance a mortgage but a modified loan may hold the second lien in place.
A bulk of the Obama housing rescue plan involves modifying loans but officials have decided that they will try to ease those second lien payments in order to ease the costs of homeownership, the official said.
“Their debt overhang will be brought down,” the official said. “We will have that program shortly.”
by Jim the Realtor | Apr 13, 2009 | Bailout |
Wondering what the FDIC is doing with all the incoming assets? You’ll see that it doesn’t take a billion dollars to participate, they have sold several bulks under $1,000,000.
Here’s the link to their bulk sales:
http://www2.fdic.gov/closedsales/LoanSales.asp
Thet’ve been selling our residential assets for 37 cents on the dollar on average (actual vs. book value), and commercial is going out at roughly 53 cents on the dollar. A spreadsheet of a sampling of this year’s sales:
fdic_closed_loan_sales_2009
(There were more sales added to website after the spreadsheet was completed)
by Jim the Realtor | Apr 10, 2009 | Bailout |
from the nyt:
MIAMI – When the woman who calls herself Queen Omega moved into a three-bedroom house here last December, she introduced herself to the neighbors, signed contracts for electricity and water and ordered an Internet connection.
What she did not tell anyone was that she had no legal right to be in the home.
Ms. Omega, 48, is one of the beneficiaries of the foreclosure crisis. Through a small advocacy group of local volunteers called Take Back the Land, she moved from a friend’s couch into a newly empty house that sold just a few years ago for more than $400,000.
Michael Stoops, executive director of the National Coalition for the Homeless, said about a dozen advocacy groups around the country were actively moving homeless people into vacant homes — some working in secret, others, like Take Back the Land, operating openly.
In addition to squatting, some advocacy groups have organized civil disobedience actions in which borrowers or renters refuse to leave homes after foreclosure.
The groups say that they have sometimes received support from neighbors and that beleaguered police departments have not aggressively gone after squatters.
“We’re seeing sheriffs’ departments who are reluctant to move fast on foreclosures or evictions,” said Bill Faith, director of the Coalition on Homelessness and Housing in Ohio, which is not engaged in squatting. “They’re up to their eyeballs in this stuff. Everyone’s overwhelmed.”
On a recent afternoon, Ms. Omega sat on the tiled floor of her unfurnished living room and described plans to use the space to tie-dye clothing and sell it on the Internet, hoping to save some money before she is inevitably forced to leave.
“It’s a beautiful castle, and it’s temporary for me,” she said, “and if I can be here 24 hours, I’m thankful.” In the meantime, she said, she has instructed her adult son not to make noise, to be a good neighbor.
‘A modern-day underground railroad’
In Minnesota, a group called the Poor People’s Economic Human Rights Campaign recently moved families into 13 empty homes; in Philadelphia, the Kensington Welfare Rights Union maintains seven “human rights houses” shared by 13 families. Cheri Honkala, who is the national organizer for the Minnesota group and was homeless herself once, likened the group’s work to “a modern-day underground railroad,” and said squatters could last up to a year in a house before eviction.
Other groups, including Women in Transition in Louisville, Ky., are looking for properties to occupy, especially as they become frustrated with the lack of affordable housing and the oversupply of empty homes.
Anita Beaty, executive director of the Metro Atlanta Task Force for the Homeless, said her group had been looking into asking banks to give it abandoned buildings to renovate and occupy legally. Ms. Honkala, who was a squatter in the 1980s, said the biggest difference now was that the neighbors were often more supportive. “People who used to say, ‘That’s breaking the law,’ now that they’re living on a block with three or four empty houses, they’re very interested in helping out, bringing over mattresses or food for the families,” she said.
