The House Financial Services' housing subcommittee held a formal hearing
this week on the administration's new initiatives to provide help to
underwater and unemployed homeowners through the Home Affordable
Modification Program (HAMP).Most of the industry participants testifying on Capitol Hill applauded the
Treasury's efforts to tackle these foreclosure triggers, but there are some
who are questioning the logistics and the true effectiveness of the new
program enhancements.These enhancements, announced by the Treasury
just three weeks ago, include
principal write-downs on underwater mortgages, an FHA negative equity
refinancing program, and temporary assistance for homeowners who've lost
their jobs. Andrew Jakabovics, associate director for housing and economics at the
Center for American ProgressAction Fund, said, "HAMP has been criticized by its overseers for
essentially trying to address last year's bad mortgages - subprime and other
exotic loans whose terms were largely unsustainable from the start. In
moving to offer underwater but otherwise creditworthy borrowers an FHA
refinancing and in bringing principal write-downs into the HAMP modification
process, the administration is attempting to tailor its response to address
the current problem of prime loans going bad."Dean Baker, co-director of the Center for Economic
and Policy Research, stressed to lawmakers that wider use of principal
write-downs would be a strong tool in deterring the growing problem of
strategic defaults. "Being underwater means that homeowners have relatively little at stake in
keeping their homes," he said. "The fact that such a huge number of
mortgages are underwater guarantees that there will be millions of
homeowners facing default and foreclosure."But Baker noted that the housing bubble is still deflating and prices are
expected to fall further still. He says when you crunch the numbers, many
homeowners "will be better off giving up their home," but rather than
displace and uproot these families, Baker put forth a proposal to lawmakers
that he says would be "a much more efficient approach." Baker urged Congress to enact legislation that would "temporarily change the
rules on foreclosure" to allow homeowners to stay in their homes, paying the
market rent for a substantial period of time following foreclosure. By
incentivizing lenders to negotiate, he says this 'Right to Rent' law would
"immediately benefit all homeowners facing foreclosure, could be implemented
at no cost to taxpayers, and would require no new bureaucracy."The Congressional Oversight Panel said in a report
issued earlier this
week, "The long delay in dealing effectively with foreclosures underscores
the need for Treasury to get its new initiatives up and running quickly, but
it also underscores the need for Treasury to get these programs right. Even
if Treasury's recently announced programs succeed, their impact will not be
felt until early 2011."Phyllis Caldwell, head of the Treasury's Homeownership Preservation Office,
told the subcommittee that implementation details for the principal
write-down option is expected by early fall, with the unemployment
forbearance component likely within the next two months.Rep. Maxine Waters (D-California), chair of the housing subcommittee,
expressed concern over the voluntary nature of the principal write-down
piece of the program and bank executives
' testimony from earlier in the week that a
large-scale principal forgiveness push is unfair to a majority of
mortgage-paying homeowners. "Increasingly, I am unconvinced that these voluntary programs are going to
provide the assistance that homeowners desperately need," Waters said at the
hearing. "When these financial institutions find themselves underwater on
their own real estate investments, they themselves often stop making
payments," she said, citing Morgan Stanley's strategic default earlier this
year on five underwater office buildings in San Francisco.In his testimony, FHA Commissioner David Stevens pointed out that the
"housing initiatives must balance the need to help responsible homeowners
struggling to stay in their homes, with the recognition that we cannot and
should not help everyone." Promote your business and
services online and offline, find out when our next mixer is.Connect with other successful
womenReal Estate Investing Education,
take advantage of today's real estate marketBuild Your Business-Drive Your Dream Promo
Code: legendwww.TotalSolutionsAlliance.com Connect with me on Facebook
Twitter LinkedIn
this week on the administration's new initiatives to provide help to
underwater and unemployed homeowners through the Home Affordable
Modification Program (HAMP).Most of the industry participants testifying on Capitol Hill applauded the
Treasury's efforts to tackle these foreclosure triggers, but there are some
who are questioning the logistics and the true effectiveness of the new
program enhancements.These enhancements, announced by the Treasury
just three weeks ago, include
principal write-downs on underwater mortgages, an FHA negative equity
refinancing program, and temporary assistance for homeowners who've lost
their jobs. Andrew Jakabovics, associate director for housing and economics at the
Center for American ProgressAction Fund, said, "HAMP has been criticized by its overseers for
essentially trying to address last year's bad mortgages - subprime and other
exotic loans whose terms were largely unsustainable from the start. In
moving to offer underwater but otherwise creditworthy borrowers an FHA
refinancing and in bringing principal write-downs into the HAMP modification
process, the administration is attempting to tailor its response to address
the current problem of prime loans going bad."Dean Baker, co-director of the Center for Economic
and Policy Research, stressed to lawmakers that wider use of principal
write-downs would be a strong tool in deterring the growing problem of
strategic defaults. "Being underwater means that homeowners have relatively little at stake in
keeping their homes," he said. "The fact that such a huge number of
mortgages are underwater guarantees that there will be millions of
homeowners facing default and foreclosure."But Baker noted that the housing bubble is still deflating and prices are
expected to fall further still. He says when you crunch the numbers, many
homeowners "will be better off giving up their home," but rather than
displace and uproot these families, Baker put forth a proposal to lawmakers
that he says would be "a much more efficient approach." Baker urged Congress to enact legislation that would "temporarily change the
rules on foreclosure" to allow homeowners to stay in their homes, paying the
market rent for a substantial period of time following foreclosure. By
incentivizing lenders to negotiate, he says this 'Right to Rent' law would
"immediately benefit all homeowners facing foreclosure, could be implemented
at no cost to taxpayers, and would require no new bureaucracy."The Congressional Oversight Panel said in a report
issued earlier this
week, "The long delay in dealing effectively with foreclosures underscores
the need for Treasury to get its new initiatives up and running quickly, but
it also underscores the need for Treasury to get these programs right. Even
if Treasury's recently announced programs succeed, their impact will not be
felt until early 2011."Phyllis Caldwell, head of the Treasury's Homeownership Preservation Office,
told the subcommittee that implementation details for the principal
write-down option is expected by early fall, with the unemployment
forbearance component likely within the next two months.Rep. Maxine Waters (D-California), chair of the housing subcommittee,
expressed concern over the voluntary nature of the principal write-down
piece of the program and bank executives
' testimony from earlier in the week that a
large-scale principal forgiveness push is unfair to a majority of
mortgage-paying homeowners. "Increasingly, I am unconvinced that these voluntary programs are going to
provide the assistance that homeowners desperately need," Waters said at the
hearing. "When these financial institutions find themselves underwater on
their own real estate investments, they themselves often stop making
payments," she said, citing Morgan Stanley's strategic default earlier this
year on five underwater office buildings in San Francisco.In his testimony, FHA Commissioner David Stevens pointed out that the
"housing initiatives must balance the need to help responsible homeowners
struggling to stay in their homes, with the recognition that we cannot and
should not help everyone." Promote your business and
services online and offline, find out when our next mixer is.Connect with other successful
womenReal Estate Investing Education,
take advantage of today's real estate marketBuild Your Business-Drive Your Dream Promo
Code: legendwww.TotalSolutionsAlliance.com Connect with me on Facebook
Twitter LinkedIn
via Ping.fm
No comments:
Post a Comment