Obama $1 Trillion Mortgage Fix Rumor Pushing Bank Stocks

[dixiegrrrrl]

Oh my...this IS interesting...and explains why bank stocks have jumped. Even BOA ( BAC) is above 6.00 for the first time in months.

Remember that Fannie Mae/Freddie mac were used to give banks a boost by guaranteeing bad/questionable mortgages..
now there is rumor that Pres. Obama has a plan:
"all homeowners with a Fannie or Freddie-backed mortgage can refinance with a new mortgage at a fixed rate of 4.2% or less if they have been current on their payments for at least three months. And the clincher is that the plan imposes no other qualification - no appraisal or income verification.
The typical borrower would reduce his or her principal and interest payments by about $350 dollars, a total reduction in mortgage payments of nearly $100 billion per year, according to Hubbard. It is expected to help refinance $3.7 trillion in mortgages and would come at an immediate fixed cost of $121 billion to the government."
The above is about halfway down this article:
http://www.thestreet.com/_yahoo/story/11366791/1/obama-1-trillion-mortgage-fix-rumor-pushing-bank-stocks.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Note who makes the money here: " Refinance"....that means the banks get fees for that "re-finance" and get the push in the new mortgage interest payments. Interest payments are highest in the first 5-7 years of a new or re-financed mortgage.
AND looks like they want to blow another bubble...notice there is NO no other qualification - no appraisal or income verification. The same sub prime gimmick that was blamed for the housing problem in the first place.

[Renew Deal]

1. I'm not sure that it can be judged by this limited information

But it is interesting.

[Celebration]

2. but in this case they owe the money anyway

So to me it makes sense not having to qualify. It isn't as if they are increasing their principal amount. I basically think it is a good idea, although I am not sure about the legalities of the people that hold the notes at higher interest rates. However, this will probably mean fewer foreclosures and thus more money for the bond holders.

It should mean a pretty big boost the economy. But this was later in the article. Looks like NOT good for the banks.

"According to Stifel Nicolaus analyst Chris Mutascio, if the plan were to be implemented as suggested, it would have negative ramifications for banks because they are biggest holders of agency mortgage-backed securities and bondholders would suffer the most pain from such a plan.

"Details of such a proposed plan are sketchy at best, and we have no idea of the chances of it actually coming to fruition. But, if it were to occur, someone has to pay for it. Unfortunately, it will be the bondholders because the plan is simply a transfer of wealth from the bondholder to the homeowner via a reduction in loan yields through the refinancing," he wrote in a report."

[ms.smiler]

3. dixiegrrrrl, you know that I sued the banksters.

80% of the mortgages sold in 2006, the same year as mine, contained fraud. You understand how failed & fraudulent securitization and MERS has clouded the Title to millions of properties. So you & I may both be wondering exactly how does one go about refinancing fraud.

I don’t really expect any such mortgage fix, but the idea of such a program brings many questions to my mind.

The loans were never properly or legally pledged to the Trusts, so how could the bondholders collect money from any refinance? Years after the Trusts closed; will there finally be fraudulent Assignments of Mortgage to the Trusts filed in our land records prior to the refinancing, further clouding the property Titles? Since MERS never legally created any Certifying Officers, who would sign the Satisfactions of Mortgage?

Would this be a way to recycle loans from failed MBS that were sold to the U.S. government and the Federal Reserve? Since our land records contain only the original mortgage lien, will fraudulent Assignments to servicers or banks be filed in our land records prior to the refinancing? That would enable the banks to collect yet again upon the same loans they never funded in the first place.

Will the new mortgage loans be securitized? Will any new MBS have government guarantees so they’ll be appealing to investors? Will MERS still be used as the Mortgagee?

Will the new mortgage agreement have any clauses whereby the homeowner agrees not to sue because of missing or problematic documents or Title problems?

I would really like to see good things happen for homeowners and our economy. So rather than lock homeowners into new debt, how about the banks compensate the homeowners for the loan origination fraud and damage done to their property Titles?

Isn’t that just like an honest person though, to insist upon what is lawful and just?

[dixiegrrrrl]

7. "Would this be a way to recycle loans from failed MBS that were sold to the U.S. government?"

I suspect so.
And, by writing "new" mortgage, via re-finance, there will be the opportunity to :
earn loan fees,
legitimize the loans, securitize them all over again,
plus earn interest from day one, just as in a new first mortgage.
Plus, if they are not going to look to see if owners are really qualified, ( no doc loans, again) I suspect this plan will not
decrease any foreclosures down the road.

I would be surprised if MERS would be used, I think that is too tainted by now.
I do suspect that phony/uncontested foreclosures via for-hire law firms will continue, tho.

[Ruby the Liberal]

4. This is interesting.

Without an appraisal, that would knock off $350 or so from closing costs, but you would still have all of the other HUD-1 line items. Assumption is that the refi can only be the payoff with closing costs not allowed to be rolled in?

The income verification thing is what is intriguing me the most though. How is this not going back to the days of liar loans? I mean, I guess being current for 90 days carries some weight on that.

It also doesn't say whether this (rumored) plan will kill a borrower's credit rating like the existing plan.

[JDPriestly]

5. Banks should be required to do and receive no fees.

This will help the balance sheets of the banks. They will receive the interest.

They should not be able to charge additional fees for the refinancing. No way.

[Ruby the Liberal]

6. Agreed, and if you use the same title company

you should be able to get a discount (or at least my title company offers that on refis) within a given time frame.

[arendt]

8. Given the condition stated, I do not see them equal to liars loans

From your quote:

"all homeowners with a Fannie or Freddie-backed mortgage can refinance with a new mortgage at a fixed rate of 4.2% or less if they have been current on their payments for at least three months."

These people already own homes. They have managed to pay these loans (or, by some means avoid foreclosure) since the 2008 meltdown.

That in itself demonstrates way more assets and payment record in much tighter economic circumstances than the NINJAs.

----

Other than that factual disagreement, I agree this looks like another windfall for the crooks.

[dixiegrrrrl]

9. Good point.

Barring another severe downturn in the economy and an inability to continue to pay mortgages. We shall see.