**BREAKING** Obama administration to order lenders to cut mortgage payments for jobless

[cali]

Washington Post Staff Writers
Thursday, March 25, 2010; 6:01 PM

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.

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

[bluestateguy]

1. Government by executive order

Works for me! As long as I like the executive and agree with what he is doing.

[eleny]

2. And it helps the country instead of sending it into ruins

[KittyWampus]

3. many DU'ers insist Obama should end DADT with an Executive Order. For instance.

[treestar]

17. As long as it is legal

If this is part of an already existing regulatory program, it is not a problem.

[galileoreloaded]

23. I agree. This is blatant rule by fiat, and a non-starter.

Holy cow, we are trying to calm DOWN the Tea Partiers not rev em up!

[anarch]

30. perhaps some of them might benefit immediately from this, and be confused

but nevertheless, it seems like the kind of thing that is usually done through the legislative process

[Zomby Woof]

31. Your concern has been noted

I say we rev 'em up, and take 'em out.

[Cant trust em]

4. What's the enforcement mechanism?

I'll be interested to see the full release tomorrow.

[Orsino]

5. Congress won't. Somebody's gonna have to. n/t

[cali]

6. this doesn't seem to be of much interest.

[laughingliberal]

32. I think it's excellent and long overdue

Stabilizing the housing market would go a long way in starting to mitigate the effects of the economy on people. The banks have been given every opportunity to cooperate and help slow the foreclosure crisis and they, basically, took the money they were given to voluntarily participate in the program and made some pretend attempts at helping. They have modified very few loans permanently and taken money to put people on 'temporary modification' programs, kicked them off the programs after 90 days and taken the homes to boot. It's called double dipping.

With an almost non existent manufacturing base the only hope in the near term is if building and housing starts can pick up a little.

If Congress had passed the cram down provision back when they took it up, we would probably have seen some modest improvement by now. They didn't and now it's time to quit effing around with the banks and demand they do their part.

[OneGrassRoot]

7. I admit I'm not spending the time I should...

and just popping in and out, but it feels there's been a sea change since the passage of HCR. I mean, it feels like the Obama Administration is putting Corporate America on notice, big time, and truly doing the will of The People.

I'm sure many will jump in here to tear that down -- that it's all for show and whatever they've done really sucks if you look closely -- but that's the overall feel I'm getting from the last few days.

And it feels very, very good.

Thanks, Cali.

:)

[branders seine]

8. why didn't he do this in January 2009?

good idea though! :thumbsup:

[cali]

11. Perhaps he hoped Congress would deal with it

[Uncle Joe]

9. Kicked and recommended.

Thanks for the thread, cali.:thumbsup:

[berni_mccoy]

10. I rec'd at 20 and it stayed at 20. WHO THE FUCK would unrec this?

[cali]

13. someone who's "Obama is a corporate stooge" pov is threatened.

[JoeyT]

16. Or maybe someone from the exact opposite side.

Someone that thinks corporations are the greatest thing on earth and can do no wrong, so the very idea of the government limiting corps offends them somehow.

It gets a rec from me though.

[galileoreloaded]

29. Unrec for the authoritarianism it implies, and the utter lack of ability to execute. A fluff piece.

n/t

[laughingliberal]

33. Funny, BofA announced they would be starting a program exactly like this to reduce principal

on mortgages which are underwater. I said then they wouldn't be doing it unless they knew they were about to be pounded by the government. They got out in front of the story by a few hours to look like the good guys. I think it's well within the ability of the government to execute this plan. As for authoritarianism? I like this better than the authoritarianism and oppression homeowners have been under from the banks.

[leeroysphitz]

12. I'm pleased to see the Obama admin move in this direction.

Still, I feel sorry for people who lost thier homes last week.

[liberal_at_heart]

14. I haven't been very happy with Obama lately but I am glad he is doing this

My mother in law has bee waiting for about 7 months to hear if she qualifies for the modification plan. Her case hasn't even been assigned to anyone yet and is still pending.

[Luciferous]

15. K&R

[Name removed]

18. Deleted sub-thread

Sub-thread removed by moderator. Click here to review the message board rules.

[taught_me_patience]

19. I don't see renters getting help for paying rent

just a big fuck you from the government.

[Sebastian Doyle]

20. That's my only problem with this

I think it's absolutely great news for people with mortgages. But when do renters get a break? As Thom Hartmann has pointed out a few times recently, renters already pay higher taxes, as the deductions that mortgage payers get aren't available to us.

My rent went up this month, at a time when I can least afford any increase in expenses. How about a little help for the rest of us?

[ProSense]

21. So you

think tax payer money should go to people who own apartment buildings?

Were you upset that Cash for Clunkers didn't help with bus and train fares?

Everyone benefited from the stimulus in one way or another.

[piratefish08]

25. ding ding ding!

[laughingliberal]

34. I think the issue here is the foreclosure crisis is making it impossible for the economy to move

A lot more people are going to be walking away if something isn't done which is going to keep a glut of houses on the market meaning construction is at a standstill. If that can slow a little and the inventory of homes starts to come down, it will help get some people back to work which should help a lot of people in the long run.

Hell, I've never needed food stamps or subsidized housing or any of that but I've never gotten pissed off the help was there for people who needed it. First because I believe in helping those who are struggling and, second, because it is money going into circulation which helps the economy.

[taught_me_patience]

36. I believe it's the continued prolonging of the foreclosure

problem that is hurting the economy and will continue to do so for a long time. I believe in letting the market clear out this "shadow inventory" so we can make a real recovery. I believe we're rewarding moral hazard. It's just a difference of opinion. We've already thrown trillions at the housing issue: fannie and freddie, fed purchase of mbs, fed quantitative easing... time for others to get some benefit too.

[laughingliberal]

37. Correct. It is a difference of opinion

As to the moral hazard, you will note most of the help is for those who are not delinquent on payments as yet. This was, largely, true of the last program, too. A great many of these, now, are conventional loans and the problems are the result of decreased income. Most of the people who will qualify for help under this are those who, with a little help, can recover and will keep the homes long term. Those who really can't hold on will probably not qualify for this.

Also, it looks as if most of the money is that which has already been allocated. It's a question of now requiring the banks to use it to help people instead of pocketing it and pretending to help. The real moral hazard is to let the banks run through the rest of this money without doing anything to help.

There are a lot of homes which can be saved. The ones who are already down for the count, like me and my husband, will not save their homes through this. I think it's the right balance. The 'shadow inventory' will still clear out. Those who can save their homes through this program are the ones who can get back on their feet with a little help and their homes will be saved. I really believe this.

[Dawgs]

40. +1

:hi:

[Dawgs]

39. I'm sorry, but this isn't about helping those that are jobless.

Although it may appear that way, this is not necessarily meant to be relief for those that are hurting. I think it's really meant to help stabilize the housing market.

Foreclosures are killing the housing market by lowering the price of people's homes. My wife and I, for instance, are trying to sell our home. It's almost been impossible as every time a foreclosure home is sold it seems another one is put on the market. Something like this will prevent that from happening.

[laughingliberal]

43. You are correct about the help it will provide homeowners

but stabilizing the housing market will help jobs. With the glut of homes on the market and prices down so far, new home starts and new construction, in general, have been almost non-existent. Once that stabilizes, there will be people able to go back to work. My husband is in the trades. We have managed to keep his business open (sole proprietorship with me helping him) but it's barely been enough to feed us and put gas in the truck. We are fortunate. Businesses and contractors involved with housing here have been closing up shop at phenomenal rates. I think stabilizing the housing market will help put some people back to work. In fact, I think it will do more than the current jobs' bill.

[Politicalboi]

22. We all benefit in a way

I don't have a mortgage or a new car. Just like HCR I won't see anything from that either for now. But in the long run if more people get back on their feet, the better the economy for all. Looks like it might be a good time to invest in real estate before the prices go back up. There are going to be less abondoned homes when this hits. So all those houses that got forclosed on, will soon be bought up. Now if I only had the money to invest.

[prolesunited]

26. Yep, I didn't buy a car

and I'm not buying new appliances, but I don't mind money being allocated for that. I only wish they would show more favoritism for American-made products or products that the US worker gains the most from.

There are entire blocks turning into unsafe, undesirable areas because of the foreclosures. And those who wind up homeless are just more draining on the system in terms of services.

What is it around here with the I'm not getting anything so it sucks attitude around here?

[Odin2005]

24. K&R This is good!

[Iwillnevergiveup]

27. Hmmmm

This could have a very beneficial ripple effect. To be jobless and homeless is the worst. I heard today it's taking an average of over 8 months for folks who have listed their homes to sell them.

[waiting for hope]

28. K&R

This is something I can get behind. I've just made a year unemployed, and I know that when I send in a resume, I am competing with 200 others that are similar .. I've been told I'm either over qualified or I don't have the education to coincide with my experience. Didn't think that 20 years experience needed a masters at this point in time, but many employers are taking advantage of the current job market, positions that I would be perfect for are now going to CPA's for far less money than they should be making.

[laughingliberal]

35. K & R nt

[howard112211]

38. I am conflicted over this whole foreclosure issue.

I am a renter with a pending PhD. I will probably rent until my mid thirties, until my personal calculations suggest that I can afford to buy something. I see bail outs of borrowing homeowners as rewarding irresponsible behavior. It is one thing to go underwater because of costs of living. It is another to think one needs to own a house. I understand however that something has to be done so the economy doesn't get drug down. And I wouldn't want to see those people get kicked out on the street either. My suggestion would be that the state purchases these homes at their market value and the people currently living in them get to stay as renters, paying rent directly to the state. If at some point they "get back on their feet", they get offered the option to buy it back.

[gkhouston]

41. Let me give you a different perspective...

you get the Ph.D. and become a research scientist and live on grants, successfully, for several years. You buy a house with a conventional loan, and put down a hefty down payment. All is well for a time. You reach the point where you've now paid off half the value of the house.

The economy tanks. Grant money dries up. You no longer have a source of income. You're no longer young and the economy's in the shitter, so finding a new job isn't a trivial matter. Some of the people who value your experience and want to hire you can't, because there's a hiring freeze on. You still have mortgage payments to take care of.

That's what life is like in my world right now. We're hanging in there because we've got savings, but they won't last indefinitely.

My point is this: don't be so quick to assume that everyone who's in a hole right now is there as a result of "irresponsible behavior". Anyone can have health problems. Anyone can lose their job. And most of us can't go on paying the mortgage forever unless we can work.

[howard112211]

42. Yeah, I know, I'm in the typical demographic where "Libertarianism" seems tempting...

and that fact sometimes clouds judgement.

Overall, I agree with the idea that something is being done. I would never do something insane like vote for Ron Paul because of this issue. Its good to have a social net.

[NNN0LHI]

47. You have an open mind

That is a trait that I admire a lot.

Don

[laughingliberal]

44. The current wave is (and has been for a while) about people whose income went down

with the economy. Furthermore, the meme that this was all about irresponsible homeowners has been greatly overblown. Much of it was but the greater (and by 'greater' I mean exponentially greater) fault lies with the banks and financial institutions who turned the housing market into a casino. But I digress. The current wave of foreclosures is made up mostly of those who have lost jobs they never thought they would lose and people losing businesses that have tanked due to the tanking of the housing market. So, the moral hazard thing just doesn't work for me. The moral hazard is exactly the opposite of this, in fact. We have rewarded the banks and financial institutions, who are the ones most at fault here, giving them billions to encourage them to help homeowners work something out. They have played slimy games with this and the people who are suffering (mostly because of the way THEY tanked the economy of the nation) became pawns, once again, in their games of taking money for pretending to help without really helping. The moral hazard would be to allow the banks and lenders to run through the rest of this money (because it is money already allocated) without requiring them to use it to help stop some foreclosures (just as they have been doing). It amazes me that it is so easy to get Americans to blame others like homeowners, illegals, people who could afford to buy insurance and don't, 'welfare queens,' union workers, etc...for the ills of the nation while letting those at the top who have gamed the system in ways we have not even imagined yet off the hook. The elite appreciate those who buy this and fight amongst themselves. After all, they have money to steal and it would just so cramp their style if they had to deal with the public in their face demanding they stop being 'irresponsible.'

There is not the money for the government to buy up the homes. If there was, I would favor what FDR did when the government took over the loans, modified them, and people paid the government. A lot of people stayed in their homes and the government made a profit in the end. But, we know they are not going to do that and this sounds like a good plan.

[howard112211]

45. "Helping out people who lost jobs they never thought they would lose"

I agree we should be doing that :hi:

[bvar22]

46. K&R

I heartily applaud this!
:applause:

NOW, if he would use the same mechanism to immediately extend Medicare Eligibility to the Unemployed over 55, NOT as "Health Car Reform", but as "Emergency Economic Aid".....

...I will put his bumper sticker back on my car.

[laughingliberal]

50. +1000 nt

[earth mom]

48. My post was removed from this thread-so I will say again that this is BULLSHIT.

Obama should be helping every middle class, working poor and the poor too!

EVERYONE but the rich is hurting right now and could benefit from a break on their mortgage-be it an interest rate deduction or reduction in payment for a period of time.

Obama went about the bailout ALL WRONG and should have given a chunk of money to taxpayers-20 or 30K-with the stipulation that all or part of it would go to green technology which would have gone far to solve the economic crisis we're in and to help save our planet!

That is what my deleted posts said in a nutshell, and I was attacked and ridiculed for speaking the truth because I didn't kiss Obama's ass about this!!!

Even my husband had the same reaction to this news!

And I'm sure the majority of the hard working tax paying people in this country feel exactly the same way!

[lumberjack_jeff]

49. If this is as I understand it, it might do more harm.

The executive order says that lenders must reduce the payments - not the interest rate.

What it does is turn a bunch of big mortgages into negative amortization mortgages, in which the uncollected interest gets added to the principal. Houses further underwater is not a good solution.