More “Hope for Homeowners” facing foreclosure, or just more hot-air from Washington, DOA? Well it appears that Fannie Mae and Fredie Mac – the semi-defunct, quasi-government holders of trillions in mortgage debt have announce today, November 20, 2008 that they will suspend foreclosure proceedings into January 2009, obviously the very very least they could do.
The suspension will effect as many as 16,000 families facing a Holiday heave-ho.
In order to support the streamlined modification program announced on November 11, 2008, Fannie Mae (NYSE: FNM) today issued a notice to its loan servicing organizations and retained foreclosure attorneys directing them to suspend foreclosure sales on occupied single-family properties as well as the completion of evictions from occupied single-family properties scheduled to occur from November 26, 2008 until January 9, 2009.
The temporary suspension of foreclosures is designed to allow affected borrowers facing foreclosure to retain their homes while Fannie Mae works with mortgage servicers to implement the streamlined modification program scheduled to launch December 15. Foreclosure attorneys and loan servicers will be instructed to use the additional time to reach out to borrowers who have defaulted on their loans and continue to pursue workout options. The initiative applies to loans owned or securitized by Fannie Mae.
The streamlined modification program is aimed at the highest risk borrower who has missed three payments or more, owns and occupies the primary residence, and has not filed for bankruptcy. The program creates a fast-track method for getting troubled borrowers into an affordable monthly payment through a mix of reducing the mortgage interest rate, extending the life of the loan or even deferring payments on part of the principal. Servicers have flexibility in the approach, but the objective is to create a more affordable payment for borrowers at risk of foreclosure.
This is on the heels of FDIC Chair Sheila Bair’s announcement that yet another program to help stop this ridiculous and economically dangerous level of forecosures.
What about the thousands of families getting foreclosed upon between today and the day before Thanksgiving – they still need to make “other arrangements” for things like sleeping, eating, staying warm and dry, getting the kids to school, not losing their job while living out of their car – just the usual Holiday hustle and bustle.
So far the Federal Government has only had to pass one Bailout Bill for the Banks to get help (and everyone else who does not deserve it) and just one Bailout Bill to help out the most back-ass-wardly managed industry in the nation – the forever tank-building, electric car killing, anti-gas efficiency Auto contingency – but somehow it is taking four or five programs to help a fraction of the taxpayers at risk of foreclosure.
The WSJ Blogs had some premature self-congradulations from Fannie – given the record of troubled loan workouts ove the past year (numbers vary greatly from source to source), Fannie officials may want to tone down the expectations:
Fannie Mae will be working with foreclosure attorneys and servicers to reach out to the more than 10,000 borrowers the company estimates would be affected during this period. Borrowers who have Fannie Mae loans that are scheduled for foreclosure between November 26, 2008 and January 9, 2009, will be contacted directly by the attorney handling the foreclosure. If the home is occupied, Fannie Mae has instructed servicers and attorneys to suspend the foreclosure.
Allison also said Fannie Mae’s loan servicers are prepared to work with borrowers during this period, even if previous workout efforts have been unsuccessful. As part of the company’s “Second Look” initiative, Fannie Mae personnel have been reviewing seriously delinquent loans to determine if the borrower has been contacted and all workout options have been exhausted.
Given that everyone and their uncle seems to have lost their jobs – or are under threat of losing their jobs – we need all of the folks we can to be stable and housed – not on the virge of economic ruin and eviction – if we even think we are going to have a chance of beating down this Depression Demon that is trying to come to life.
Where’s the new Prez? We need some serious leadership here and now, or this thing is going to be completely beyond reason by Q2-09.
November 20, 2008 at 4:08 pm |
Interesting foreclosures are stopped until January 9th but the new modification programs don’t roll out until December 15th. Take out 4 days for the hoidays and that leaves them 16 business days to
reach out to homeowners….call me a pesimist but I am pretty sure that on January 9th they will still be scratching their heads and asking each other what are we supposed to be doing?
It is amazing that after all of this time there is still no program in place that is MANDATED by the government leaving modifications in the hands of the Servicers is what got us here to begin with.
We need major reforms, mandated by the government using the bail out money for what it was intended. If that means that they have to modify every mortgage in the country then stop hemming and hawing and get to it. Don’t discount the idea, it may come to pass. Hopefully it will not be too late to turn the flood of foreclosures and keep us from becoming a third world country.
As more of us face unemployment in the coming months or wage cuts if we are lucky enough to keep out jobs it will become necessary to have these modification plans in place. That includes giving Bankruptcy Judges the ability to modify mortgages of primary residences. A plan that Obama is in favor of and should pass by the second quarter of 09.
November 20, 2008 at 4:56 pm |
I feel like this is nothing more than an indirect method to prop up home values, and also to stimulate shopping for the holiday season. Everyone and their dogs know consumption is going down because people are low on credit and worried for their jobs. By knowing they won’t be forced out of their homes til next year will people forget their problems and spend? Which is the governments key weapon for stimulating the economy.
November 20, 2008 at 7:26 pm |
I guess they are not paying attention to the recent SEC filings of these retailers:
Watch those store money cards and gift cards.. and credit slips! Stores that informed the Security Exchange of closing plans between October
2008 and January 2009.
PLEASE PASS THIS ON TO ALL YOUR FAMILY AND FRIENDS.
Circuit City stores… most recent (? how many)
Ann Taylor- 117 stores nationwide are to be shut
Lane Bryant, Fashion Bug and Catherine’s to close 150 store nationwide
Eddie Bauer to close stores 27 stores and more after January
Cache will close all stores
Talbots closing down all stores
J. Jill closing all stores
GAP closing 85 stores
Footlocker closing 140 stores more to close after January
Wickes Furniture closing down
Levitz closing down remaining stores
Bombay closing remaining stores
Zales closing down 82 stores and 105 after January.
Whitehall closing all stores
Piercing Pagoda closing all stores
Disney closing 98 stores and will close more after January.
Home Depot closing 15 stores 1 in NJ (New Brunswick)
Macys to close 9 stores after January
Linens and Things closing all stores
Pacific Sunware closing stores
Pep Boys Closing 33 stores
Sprint/ Nextel closing 133 stores
JC Penney closing a number of stores after January
Ethan Allen closing down 12 stores.
Wilson Leather closing down all stores
Sharper Image closing down all stores
K B Toys closing 356 stores
Loews to close down some stores
Dillard’s to close some stores
And the pain continues. In Texas after Hurricane Ike the only hospital on Galveston Island that takes indigent care cases is laying off 4,000 employees…..this move along with the hurricane will decimate the economy of the island for years to come, it will strain the economy of nearby Houston and cause countless businesses to fail, homes to foreclose.
Meanwhile Texas is being denied FEMA funds for Hurricane Ike victims because their budget has a surplus. (not anywhere near the billions needed) So again we only reward bad decisions and fiduciary incompetence and those states that can operate in the black get nothing. Good thing Louisianna did not have that problem after Katrina since mismangement is their middle name.
I know we are going off track, but really this Country needs an intervention, not stall tactics.
November 20, 2008 at 8:17 pm |
Kitty,
How on earth can the Government mandate that a loan be modified? That would be a gross violation of contract law. What if you owned a mortgage that someone was not paying on? Would you be in favor of the government coming in and making you change the terms of the loan to accept less money, less interest, and a longer amortization?
That is so anti-American it’s not even funny. The problem is not with the servicers or the note holders. It is with the people that are failing to pay as agreed. Don’t get me wrong, it sucks that people can’t afford their mortgage. It really sucks that people are losing their jobs. However, making investors who own mortgages lose money makes no sense. That is just an arbitrary distribution of “aid” based on perceived need.
The investors that bought these mortgages in many cases are college trust funds. They are also government pension funds. They are also pieces of failing mutual funds. It’s not just make believe money. It is SOMEONE else’s money and it is real. The investor that owns the loan is not to be confused with the loan servicer or the loan originators.
No bail out for big corporations.
No bail out for borrowers.
November 21, 2008 at 8:10 am |
Finally some good news leading into the holidays for millions of struggling homeowners, through a plan of action that is actually trying to achieve something. I applaud the companies and agencies involved for this much needed action.
I know it is short term, but atleast policy makers are doing something, unlike the TARP rollout.
November 21, 2008 at 10:47 am |
Kitty,
This is what I feel like when reading this news, this isn’t a real solution but a stall tactic. For what reason I’m not sure, but they don’t have a real solution in dealing with this.
November 21, 2008 at 1:56 pm |
Most people losing their homes deserve it. The banks may have made them a bad deal but nobody forced them to come to the table. They did so because of their own greed.
Same with UAW. That’s great that they can negotiate great pay and benefits but they can’t be bothered to give any of it back “until 2010″ when the company won’t last that long. Pretty smart – being a major factor in bankruptying your own employer.
December 9, 2008 at 5:08 pm |
is there any california or business & professional for this or it is BS