President Obama has now filled in the details of his plan to help homeowners that he first unveiled in late February. This means banks now have all the rules they need to, as the administration’s guidelines (pdf) put it, “immediately to modify eligible mortgages so at-risk borrowers can better afford their payments.”
Are banks on board? Some reports say yes. There are financial incentives built into the program to attract mortgage servicers and banks, such as cash payments for modifiying mortgages people can’t meet anymore.
Others wonder how committed to the full program banks are. They point to a fight over giving bankrupcty judges leeway to re-write mortgage terms, a plan the US House of Representatives just passed. Banks generally don’t like it, but judges do. As bankruptcies climb, how important is that tool in stabilizing homeowners?
On our most recent program about the foreclosure bailout, plenty of people wanted to know why they couldn’t negotiate with banks as they saw payment problems coming. Several people said they had to miss payments before banks would even talk with them — and then they had to just get in line and let the defaults pile up. Are banks now ready to take those calls? What about banks that sell loans? What are they doing to prevent foreclosures down the road?
Are you a banker? A mortgage broker? Are you trying to explain this program to homeowners? How much will this rescue plan actually affect your business, and the economy?
- Stacey Howard: Community development and home ownership director as well as foreclosure counselor for Neighborhood Economic Development Corporation
- David Kittle: Chairman of the Mortgage Bankers Association and executive vice president of Vision Mortgage Capital
- Hunter Robinson: Assistant Vice President of Timeline Management at Wealth Bridge Mortgage
- Linda Navarro: President and CEO of the Oregon Bankers Association
- Frank Alley: United States Bankruptcy judge in the district of Oregon