Mortgage Professional America forum is the place for positive industry interaction and welcomes your professional and informed opinion.

$89 billion: The price to save America's underwater borrowers

Notify me of new replies via email
Mortgage Professional America | 04 Dec 2014, 09:07 AM Agree 0
In light of the most recent Senate Banking Committee hearing, Black Knight delved into the latest available data in order to quantify the scope of the principal reduction issue.
  • Wm Matz | | 04 Dec 2014, 12:14 PM Agree 0
    There are so many factors in the underwater homes that we are unlikely ever to get agreement on a solution, e.g.:
    - Can we distinguish between borrowers who were victims of predatory lending and those who were greedy?
    - For borrowers who have lost jobs, will writedown save house, or just throw good money after bad?
    - For investor-owned mortgages, gov't payments actually benefit banks who would otherwise have to pay investors for misrepresented RMBS.
    - For good RMBS [if any], should gov't bail out investors who took risks for high returns?

    The article fails to consider in the $89B estimate that if all those mortgages were to go to foreclosure, the likely losses would be 2X-4X the $89B figure due to foreclosure costs and delays. The article also fails to take into account the looming resets of HELOCs, the HAMP mod adjustments after 5 years, interest-only ARMS going to full amortization, interest rates rising generally, and a widespread softening in the real estate market. The combination of all of these factors suggests there is no readily apparent solution.
Post a reply