The New York Times has an article up on its website that is accompanied by the picture to the left. It shows how the Federal Reserve Board and the Treasury are distributing up to 7.8 trillion dollars to the financial services industry. Although they are plowing money into the system, this money won't help with the wave of foreclosures that are spreading across America. This paragraph from the article explains why:
But analysts said the program would do little to reduce the tidal wave of foreclosures. That is because most of the foreclosures are on subprime mortgages and other high-risk loans that were not bought or guaranteed by government-sponsored finance companies like Fannie Mae
What's interesting is the fact that while there was a lot of debate and public anguish over the 700 billion dollars in bailout funds approved by Congress, the amount of loans, according to the Times, is 1.7 trillion. So under what authority is this money being lent out? If the authority was already there, why did the Congress have to act? Under what terms and conditions is this money being lent out? Who is receiving it and how much are they receiving?
It would seem that those questions would interest someone in the media, let alone Congress, yet people don't seem to be asking them. Maybe everyone just assumes that the same geniuses who got us into this mess will get us out. If so, their faith may be sadly misplaced.
2 comments:
Get this...The lenders are now re-writing the loans to fit the "correct" income and not the "stated" income that was used when the loans were made. However you aren't suppose to KNOW this unless you need to know this, read on. Loans that were made or "forced" to qualify are in big trouble at fault of the banks making their own rules and they "ALL" did it and some STILL do, believe it or not. If the pay stubs didn't reflect enough income they were simply "tossed". Then add an extra percentage rate (bump to the rate) to take it to a "sub-prime" mtg. to get the "stated" income feature. As if you must pay extra to do this horrific thing. (these were NOT "SUBPRIME loans but standard Fannie/Freddie guidelines created AFTER the deregulation of guidelines)...in other words anyone qualified for any size loan period on A+ PROGRAMS WITH AN ADDED POINTS, FEES ETC. to get this little "fuzzy math" loan. See the massive McMansions sitting vacant now. THAT is exactly why so many foreclosures are occuring and ALL the lenders allowed this. Some, again still do. NOT only the subrime lenders either. This is where the fault lies. DEREGULATION.
I deal with a massive amt. of folks now, daily...already this morning #19 folks needing help that are in trouble. If 3+ mos. down on their mortgage payments,their existing lender through their Loss Mitigation Dept. is "suppose" to re-write their loans to take no more than 38% of their gross monthly income and make IT the new paymt., thus reducing the balance and the payment to do so. "Adjust it down to fit" CitiMortgage is the leader of this new phase of "re-writes". It truly IS the only hope to save them. What is bad...is those of us that do pay on time and are penalized "for it" and do not get such a deal/reduced rate and balance. TRY explaining to someone that unless they are down 3+ mos. do they get a drastically reduced interest rate to force the lower payment. What reply do you think I am getting? I see $1600 mo. paymts. dropped to $700 mo. just by showing a y.t.d. paystub. Is this fair or is THIS going to "catch on" and really fast? Scary huh?
Think again if you think this foreclosure crisis is going to be over anytime soon.
Bottom line...We are bailing out the banks for the losses they are taking for the reducing of the balances and the interest rate for the loans they never should have made in the first place. How screwed up is that?
It IS going to help the tidal wave of foreclosures though. THIS tidal wave, only there are more tidal waves to follow this one. Then what? The banks will still collapse anyway and they know this.
They are about to "gift" these homes over to folks that "too" should have known better...they will suck up the losses and run.
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