Obama administration to order lenders to cut mortgage payments for jobless

[Omaha Steve]

Source: Washington Post

By Renae Merle and Dina Elboghdady

The Obama administration plans to overhaul how it's tackling the foreclosure crisis, in part by requiring lenders to temporarily slash or eliminate monthly mortgage payments for many borrowers who are unemployed, senior officials said Thursday.

Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower's income, which would typically be their unemployment insurance, for up to six months. In some cases, administration officials said, a lender could allow a borrower to make no payments at all.

The new push, which the White House is scheduled to announce Friday, takes direct aim at the major cause of the current wave of foreclosures: the spike in unemployment. While the initial mortgage crisis that erupted three years ago resulted from millions of risky home loans that went bad, more recent defaults reflect the country's economic downturn and the inability of jobless borrowers to keep paying.

The administration's newest push also seeks to more aggressively help borrowers who owe more on their mortgages than their properties are worth, by encouraging lenders to cut the loan balances of millions of these distressed homeowners and possibly refinance into loans backed by the Federal Housing Administration. The problem of so-called "underwater" borrowers has bedeviled earlier administration efforts to address the mortgage crisis as home prices plunged.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2010/03/25/AR2010032502426.html?hpid=topnews

[mike_c]

1. what about unemployed renters?

Are they somehow more deserving of homelessness?

[Robb]

2. And what about landlords?

...And this bill does NOTHING for homeless pets.

[Mithreal]

12. -1 It was a reasonable question.

[Lone_Star_Dem]

3. Rental subsidies already help in that respect.

As it is right now, there is less assistance out there for home owners than renters in financial distress.

[Wednesdays]

6. Really...how cruel of Obama to do this.

He should have left well enough alone.

[mike_c]

8. it was a serious question-- why the snarky answer?

Sheesh. Piss off then, if you haven't anything to offer but sarcasm.

[Fastcars]

24. Easier to deal with a mortgage.

To tell a lender to reduce payments or allow skipped payments wont necessarily cost them anything, and they may actually end up making more in the long run by charging interest for a longer period on the money borrowed. I don't think they are being ordered to forgive the debt, so they will simply add the missed payments on the end of the term.

Landlords can't simply charge more months' rent after the tenant has moved out to recoup the money from the skipped or reduced payments. Not saying renters shouldn't receive help, but I think it would take the government stepping up and making the payments to the landlord for them.

[mike_c]

25. in essence, that's exactly my point....

As proposed, the program is grossly unfair, really benefits the banks more than anyone else in the long run, and has more to do with keeping the financial industry going than it has to do with keeping people housed.

[RubyDuby in GA]

4. Thank Dog for this! I've been unemployed since last July and we're scrimping

right now to get March's house payment together so we can start the next round of bills for April.

This might actually keep us in our house.

[glowing]

5. What about people who work at the same place, but with a cut back?

[Kingofalldems]

7. Yeah....Yeah!!

K and R

[mike_c]

9. notwithstanding the three snarky answers above-- what about renters?

Many of us who rent are not in need of mortgage assistance because we've made rational financial decisions and knew we were better off renting than incurring more debt than we could repay. That's all well and good, but what happens when WE lose our jobs? Why don't we get housing assistance that's comparable, i.e. telling landlords to give US a break?

Is the OP about assistance that's meant to keep people housed or does it describe assistance that's meant to keep the banker/debtor cycle operating in a debt driven economy? If the former, unemployed renters need assistance too! If the later, it's nothing to be proud of.

[Mithreal]

13. Perhaps the focus is more on banks and mortgages rather than people

I guess they plan to let the free market take care of renters.

Anyone have any idea of helpful proposals for assisting renters?

[mike_c]

14. ultimately, help for mortgage debtors is help for the banks...

...because it helps to perpetuate the credit/debt cycle that concentrates wealth in the hands of the "investor class." I think that's what this is REALLY about-- I'll bet that more people could be genuinely helped to remain housed by addressing the root causes of homelessness instead. This proposal addresses the root causes of foreclosure and loss of confidence in the banking/financial system. It isn't designed to keep people housed at all-- to the extent that it does, that's just a happy by-product and a smoke screen to keep the consumers happily consuming.

Admittedly, it is a medium to long term view, something American politics is not generally known for.

Just my $0.02. :evilgrin:

[FrenchieCat]

15. Have you tried writing a letter to your landlord? I don't think Obama

can make your landlord reduce your rent.

[mike_c]

17. why not? If he can make bankers change their contracts with mortgage debtors...

...why not do the same for renters?

Just to clarify-- I'm currently employed, have a great landlord and very affordable rent, and am in no immediate need of assistance. But LOTS of renters ARE. Where is their help?

[FrenchieCat]

22. Because banks are regulated by the Government.....

People, not so much. This ain't China.

[mike_c]

23. so is commerce in general....

Recall that presidents have ordered GENERAL wage and price freezes in the past.

[ozymandius]

10. Some relief in that officialdom has abandoned re-inflating the real estate bubble.

This is a much more realistic move than one that attempts to push property prices upward. As for renters - that a whole different bag.

[sailor65]

11. You need to change your title

The President can't "Order" banks to do anything of the sort. The plan is to offer incentives to banks to help.

And I also want to know what is going to be done to help renters who were smart enough not to incur more debt but need equal protection?

[FrenchieCat]

16. If it is part of financial regulation, of course he can make them do it!

Government does have a say if there is a law on the books that says it does,
you know.

[elleng]

18. NOW WE'RE MOVING!!!!

[galileoreloaded]

19. How...WHA?? is this FRE or FNM, or a rule for the banks or bad reporting ????

executive fiat?? How is this even possible??

[Synicus Maximus]

20. Congress could do it, but just how does the administration do it?

[wisteria]

21. I can't wait to see the details on this. n/t