The Mortgage Cramdown – A Very Bad Idea For Homeowners
Rep. Louie Gohmert speaks out against the mortgage cramdown, which would allow judges to rewrite home mortgages during bankruptcy. This proposal would force the 92 percent of responsible homeowners to subsidize the mistakes of irresponsible borrowers and lenders.
At the very least, mortgage lenders will have to add additional fees to all new mortgages to cover for the loses this legislation will cause.
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Reworked Subprime Loans … 40% End Up Defaulting
Moody’s Investors Service: More than two of every five subprime borrowers whose mortgages were reworked in H1’07 are defaulting anyway. Among subprime adjustable-rate mortgages modified in H1’07, 42% were at least 90 days late on March 31. Modifying loans granted to consumers with poor credit records has gained favor as record numbers fail to keep up with payments and home prices tumble. San Diego California real estate
Fed Approves New Rules For Mortgage Loans … Too Little Too Late
The Federal Reserve approved new rules for home mortgage loans to protect consumers from questionable lending practices. Most of the new rules apply to subprime owner occupied home loans and go into effect 10-1-09.
Two of the best of these new loans are:
The lender must verify the borrower’s income and assets the borrower is relying on to pay the mortgage.
Lenders to escrow property taxes and homeowner’s insurance on subprime loans. This rule will be phased in during 2010.
The requirement to have escrow accounts on sub-prime loans should have been there all along but the lenders did not want the extra work. FHA and VA loans have always required escrow accounts because it addresses the stupidity factor. If you are not smart enough to save a down payment, you are obviously not going to save for your property taxes and insurance when they come due. So your lender has to set up a forced savings account to do it for you.
San Diego California real estate agent