What He Said and Didn’t Say

[Daveparts]

What He Said and Didn’t Say
By David Glenn Cox


Treasury Secretary Henry Paulson spoke to reporters yesterday after President Bush had made his announcement of the Hope Now program. The plan is simple to present to the media and the public the appearance of the administration actually doing something about the sup prime fiasco. Letters will be sent to 1.2 million borrowers in trouble and then at the lenders discretion the decision will be made but the public will get and 800 number, feel better now? That’s 1-800 yor fckd! Call now! Operators are standing by!

(Good afternoon. HOPE NOW, the Mortgage Bankers Association and the Housing Policy Council for your creativity and flexibility during these recent months. We have worked through an evolving process to help minimize the impact of the housing downturn on the U.S. economy.)

(The infrastructure to reach struggling borrowers is now in place: outreach letters are being sent to borrowers likely to be facing trouble, a toll-free number has been expanded and there are counselors available to work with struggling borrowers.)

(The American Securitization Forum represents mortgage investors and mortgage servicers, This is a private sector effort, involving no government money; so some may ask, "Why are these government officials here today?" We are here because we all know that it is in everyone's interest – homeowner, servicer, investor – to develop a market-based approach to avoid foreclosures that are preventable)

(The complexity that exists in current mortgage and mortgage securities markets poses some very practical and difficult problems. The vast majority of mortgage servicers are collecting homeowners' payments on behalf of investors scattered around the world. While each of these participants has an interest in avoiding preventable foreclosures, they are not equipped to handle the anticipated volume on their own. I saw a role for government here)

(The industry standards announced today do not change the nature of the responsibilities in the servicing industry – servicers will continue to modify loans when it is in the best interests of the investors.)

(The HOPE NOW alliance represents servicers who cover 84% of currently outstanding subprime mortgages. HOPE NOW estimates that under this streamlined approach up to 1.2 million subprime ARM borrowers will be eligible for fast-tracking into consideration for affordable refinanced or modified mortgages.)

(We owe thanks to the mortgage investors who have stepped up and enabled servicers to streamline the modification and refinancing process.)


(Additional thanks to the regulators who are here today. They regulate mortgage lending, servicing and investing institutions, so they see this issue from all perspectives. Today's announcement is a significant step. I know that everyone here has worked very hard since August, and we will continue working.)

Here! Here! Let’s hear it for the boy, banks are in trouble and must be helped to, in Paulson’s words help minimize the impact of the housing downturn on the U.S. economy. No mention what so ever of the millions of men and women or children going out into the streets this winter. 1.5 million homes this year and an estimated 2 million next year 635,000 in the third quarter alone! These numbers are of homes not of people so multiply this number times 4 and what you have is a Real Estate holocaust 14 million Americans in the street.

But God bless those bankers! They’re going to help some of those people not in trouble yet! Everyone else, So long it’s been good to know you. You see the market-based approach will leave the decisions in the hands of the same class that made the loans in the first place. Perhaps you put down 50K when you bought your home and the market in the area is weak but not awful then the answer is simple foreclose.

Now if you have a loan where you put little or nothing down and the Real Estate market is like it is in California or Michigan non-existent then that’s a loan to work with them on. Get something to mitigate an otherwise total loss. How did Henry put that? (servicers will continue to modify loans when it is in the best interests of the investors.)

So when George Bush tells you this isn’t a bailout, brother you can take that to the bank if the bank is still there. This is a cull. A wringing of the wash cloth to squeeze out the last cash from bad loans before the inevitable. Designed not to help one single American citizen because, (The vast majority of mortgage servicers are collecting homeowners' payments on behalf of investors scattered around the world.)

Did you think the government had any interest in helping its people? Have we as a nation learned nothing from Katrina? Or are we doomed to reenact the same failed policies of the Hoover administration, just let the market work. A chicken and every pot and a car in every garage except they’ll have no kitchen to cook it in and will be living in the car. Makes you proud to be an American doesn’t it? To know when millions of your countrymen are in distress your government is quick to give them an 800 number and the banks the power to pick and choose who gets help.

In the classic movie “The Jerk” Steve Martin plays an idiot rube from the country, he lands a job at a carnival as a weight guesser. Unable to grasp the con of what customers might actually win he describes everything between the clock radio and the electric frying pan on this shelf right here between the cupie doll and the electric razor finally narrowing it down to a plastic comb.

Yesterday Henry Paulson reprised the Steve Martin role. And the President reprised a role for himself in holiday fashion. Only this time he was not consulted by the ghost of Christmas future and should he wake up on Christmas day with a notion of taking a goose to Bob Cratchet’s house he will find the lights all dark. The Cratchet’s don’t live there anymore. God bless us everyone!