I would rather live my life as if there is a God, and die to find out there isn’t, than live my life as if there isn’t, and die to find out there is!

Saturday, November 15, 2008

Another Foreclosure Prevention Plan

Another Foreclosure Prevention Plan
(Everybody has one)

The FDIC explained what it wants to do:

Although foreclosures are costly to lenders, borrowers and communities, the pace of loan modifications continues to be extremely slow (around 4 percent of seriously delinquent loans each month). It is imperative to provide incentives to achieve a sufficient scale in loan modifications to stem the reductions in housing prices and rising foreclosures.

Modifications should be provided using a systematic and sustainable process. The FDIC has initiated a systematic loan modification program at IndyMac Federal Bank to reduce first lien mortgage payments to as low as 31% of monthly income. Modifications are based on interest rate reductions, extension of term, and principal forbearance. A loss share guarantee on redefaults of modified mortgages can provide the necessary incentive to modify mortgages on a sufficient scale, while leveraging available government funds to affect more mortgages than outright purchases or specific incentives for every modification. The FDIC would be prepared to serve as contractor for Treasury and already has extensive experience in the IndyMac modification process.

Basic Structure and Scope of Proposal

This proposal is designed to promote wider adoption of such a systematic loan modification program:

1. by paying servicers $1,000 to cover expenses for each loan modified according to the required standards; and

2. sharing up to 50% of losses incurred if a modified loan should subsequently re-default

We envision that the program can be applied to the estimated 1.4 million non-GSE mortgage loans that were 60 days or more past due as of June 2008, plus an additional 3 million non-GSE loans that are projected to become delinquent by year-end 2009. Of this total of approximately 4.4 million problem loans, we expect that about half can be modified, resulting in some 2.2 million loan modifications under the plan.

What many believe this really is:
$24.4 billion in welfare to people who deliberately bought more house than they could afford, paid for by us taxpayers who lived within our means. The only thing "aggressive" about this proposal is how aggressively the government would raid our wallets.

Many people have the attitude that the homeowners in trouble should not be helped at all. They feel that since those homeowners in trouble were reckless with decision to purchase a home they should just have to suffer the consequences. After all I purchased a home I could afford. If we help those who were reckless am I not being penalized for being financially prudent? That attitude is all to indicative of what is wrong with our country.
Are you really that blinded by greed and anger? If you're responsible for yourself and your family, why feel such anger and hate towards your neighbor? If 5 houses on your block, or in your neighborhood fall into foreclosure - do you not see that it affects you? That's 5 houses that just depreciated in value - bringing your home value down. That's 5 homeowners not paying taxes - yours will go up next year when the cops/firefighters/garbage pick-up/public workers/water dept..... etc. bill isn't fully funded. That's 5 families that don't shop at the local grocery store anymore. 5 families that don't eat at local restaurants, buy cars at the dealers in town. All of those places that you may be just blindly assigning as 'wasteful' - they also pay taxes to your municipality and State. They are now also going broke, so do the math.

Is it a frustrating situation? Sure. But spewing anger against those less fortunate and suffering does nothing to help the situation. This is a nationwide problem and every American should want it fixed just as soon as possible. Then we all win!

Be blessed,


Love all – Trust some – Harm none


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