Lifeline for Homeowners, Families & Communities in Bank Deal Being Negotiated by "Evil" Obama Admin

[ClarkUSA]

The Left media has run with the theme of how teh evil Obama Administration is trying to "pressure" NY Attorney General Eric Schneiderman to accept the deal, and how heroic Schneiderman is for resisting them... But I have seen the media narrative completely ignore what's in the actual proposed deal. That's important because ultimately this is a cost-benefit analysis... The draft deal, at least the mortgage modification portion of was leaked to and released by the AmericanBanker.com website and is available for everyone to read. Everyone, it seems, except for those who in the media world call themselves "journalists." First of all, let's remember that the negotiations are ongoing on this, and the legal immunity provisions are still fluid. but the banks will probably not accept a deal that offers them nothing on that side of the ledger. But here is the part of the deal that is the reason why the Administration (and Housing advocates) are predisposed towards a settlement.

The settlement would establish an affirmative duty for the bank (servicer) to offer loss mitigation option before foreclosing on the property. In addition, banks would be forbidden from pursuing dual-track (or as homeowners understand it, double-cross) process to both work on loss mitigation and foreclosure at the same time. And finally something that housing advocates have been seeking for a long time, since the beginning of the housing crisis:

Servicer shall offer and facilitate loan modifications rather than initiate foreclosure when such loan modification is a greater net present value (NPV) than foreclosure. The NPV formila used by Servicer shall be made available to CFPB upon request.

Haven't we been rightly pointing the finger at the banks for a long time for not working with borrowers to let them stay in their own homes while offering them loan modifications so that their payments would be more affordable? That is exactly what this deal would require... Not only does the deal establish an affirmative duty for the banks to offer a loan modification program, it also protects against abuses. Even if servicing agreements prohibit offering a loan modification - for some weird reason, there is notion out there that investors can expect to get paid more if a home is foreclosed on and a family set out on the street than by offering a loan modification - banks are still required to calculate whether the borrower would be eligible for a loan modification, and if the borrower is, the banks would be required to contact the parties to the service agreements and ask them to modify those agreements so that a loan modification can be offered.

Read more factual analysis from someone who has read the actual draft deal:
http://www.thepeoplesview.net/2011/08/lifeline-for-homeowners-families-and.html

[Lint Head]

1. The people that screwed us over should not be offered a damn thing.

I personally lost tens of thousands of dollars because the criminals speculated and 'phony loaned' it away.

[okieinpain]

2. dont' let reason get in the way. n/t.

[LetTimmySmoke]

3. If the deal would in pratice really offer such protections as the article says,

then I would be in favor of it. But given the recent history of the Obama Administration and the banks, I am HIGHLY skeptical.

Besides, Schneiderman's actions give the AG side leverage, and puts pressure on the banks to compromise more. Just like with the debt ceiling and the tea party, except now the shoe is on the other foot.

[BR_Parkway]

4. Here's the problem with that - Say I go rob a bank and and then the gov't steps in

and tells me I need to work out a schedule to pay the bank back, but that someone I ripped off should be paying me for my time and energy in paying the bank back.

This is not a complicated problem and neither is the solution - and it doesn't require one damn thing from Congress, who'd vote NO if Obama proposed that the sky is blue. The laws and other mechanisms are already in place - mostly through the FDIC with a little help from DOJ

The banks made fraudulent loans to homeowners that they fraudulently sold as securities to investors.
The banks sit in the middle currently collecting servicing fees while the defrauded parties on both sides get screwed over

1) any sort of settlement needs to include the banks broken up into smaller regionals (FDIC already empowered to do) with executives in jail (this is actually a job creator)
2) creation of an agency to handle the servicing of these mortgages (again, another job creator) with the investors ability to go after the banks liable for their losses due to fraud - they're not going to modify the loans to the homeowners if the gov't has already negotiated some deal that protects the banks from getting sued. (FDIC already has this authority to do)
3) rent out the vacant units the different gov't agencies currently own directly to people at 30% of their income to create affordable housing - take the rent money and hire people to fix up the units already owned that aren't currently inhabitable. Pay property taxes to the local govt's that are cash strapped because these properties are sitting vacant (HUD, AIG, Fannie/Freddie already have this authority to do - make them use it)

This it the part that really pisses me off - I'm pretty realistic in understanding that Obama can't just snap his fingers and get a health plan or repeal DOMA or any of the other stuff - I don't know that he could have gotten any more done with a different approach including during the first 2 years - yes, we gave him the House, but the Senate was a fragile "majority" at best which allowed for a lot of hostage taking, ego preening and outright obstruction in fealty to corporate masters

But the tools to fix this ongoing foreclosure crisis are all in his toolbox and there's no need to ask anyone else to vote to approve it. The problem is that he doesn't really "get" finance - so he surrounded himself with these professional money men. And none of them can envision a world beyond the one they already know. Extend, pretend and prop up the TBTF banks because that's all that they know to do.