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Gov't to announce new loan aid effort

By ALAN ZIBEL, AP Real Estate Writer Alan Zibel, Ap Real Estate Writer – 22 mins ago


WASHINGTON – The government and the mortgage industry are set to announce the most sweeping effort yet to help troubled homeowners by speeding up the process for renegotiating hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac.

The Federal Housing Finance Agency, which seized control of the two mortgage finance companies in September, scheduled a press conference for 2 p.m. EST. Scheduled to attend were officials from the Treasury Department, Wells Fargo & Co., the Department of Housing and Urban Development and Hope Now, an alliance of mortgage companies organized by the Bush administration last year.

An industry official who worked on the plan said the new approach will allow lenders to modify more delinquent loans by establishing broad criteria to speed up the process. The official spoke on condition of anonymity because details had not been announced.

The new initiative will likely have tremendous importance because Fannie Mae and Freddie Mac own or guarantee about half of U.S. home loans.

To qualify, borrowers would have to be at least three months behind on their home loans, and would need to owe 90 percent or more than the home is currently worth. The interest rate would be reduced so that borrowers would not pay more than 38 percent of their income on housing expenses, the industry official said. Another option is for loans to be extended from 30 years to 40 years, and for some of the principal amount owed to be deferred.

While lenders have beefed up their efforts to aid borrowers over the past year, their earlier efforts have not kept up with the worst housing recession in decades.

More than 4 million American homeowners, or 9 percent of borrowers with a mortgage were either behind on their payments or in foreclosure at the end of June, according to the most recent data from the Mortgage Bankers Association.

One reason the problem has been so tough to solve is that the vast majority of troubled loans were packaged into complicated investments that have proven extremely difficult to unwind.

Deutsche Bank estimates more than 80 percent of the $1.8 trillion in outstanding troubled loans have been packaged and sold in slices to investors around the world.

The remaining 20 percent are "whole loans," which are easier to modify because they have only one owner.

Nevertheless, Tuesday's expected announcement coupled with recent and more aggressive strategies from the major retail banks are important steps to fix the housing crisis. After more than a year of slow and weak initiatives, there appears to be a concerted and serious effort to get at the heart of the credit crisis: falling U.S. home prices and record foreclosures.

Citigroup announced late Monday it is halting foreclosures for borrowers who live in their own homes, have decent incomes and stand a good chance of making lowered mortgage payments. The New York-based banking giant also said it is also working to expand the program to include mortgages for which the bank collects payments but does not own.

Additionally, over the next six months, Citi plans to reach out to 500,000 homeowners who are not currently behind on their mortgage payments, but who are on the verge of falling behind. This represents about one-third of all the mortgages that Citigroup owns, the bank said.

Citi plans to devote a team of 600 salespeople to assist the targeted borrowers by adjusting their rates, reducing principal or increasing the term of the loan.

Late last month, JPMorgan Chase & Co expanded its mortgage modification program to an estimated $70 billion in loans, which could aid as many as 400,000 customers. The New York-based bank has already modified about $40 billion in mortgages, helping 250,000 customers since early 2007.

Bank of America, meanwhile, has said that starting Dec. 1, it will modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. as part of an $8.4 billion legal settlement reached with 11 states in early October.


http://news.yahoo.com/s/ap/20081111/ap_on_bi_ge/meltdown_mortgages

Aid for the Wall Street Boys , AIG , the Banks , Car company's , Folks who took on more that they could afford ... & Who pays for it ???? Hell of a way to run a Country

Lets not forget 95% of you are going to get tax relief , health care , education benefits , road and bridge improvements and all sorts of other Goodies ... Yea right !

Going to be an interesting Four years ..

Time to skip my next three mortgage payments

The guy hasn't taken office yet and you are already singing the blues...

Things are what they are.. do you expect the nation to let the Auto Industry just fall on it's face? Or the Banking industy? Or the insurance industry? Is that what you expect?

This is what deregulation does.. it always looks so good and so inviting on the front end.. and if everyone had a sense of higher purpose and did the "right things" (color within the lines so to speak) it would be fine. Except you always find those willing to and hoping to exploit the system....

Find those and you will have someone to blame maybe. But for now, instead of complaining, perhaps it's time to roll up your sleeves and dig in for a long and hard road ahead....

But that's JMO.... you don't have to accept it or like it.

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Time to skip my next three mortgage payments

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dang I bought mine land contract.....

REDNECK

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REDNECK

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I guess it's time to do my american duty and take out a loan I can't pay for....

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Time to skip my next three mortgage payments

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ya do know sometimes ya gotta reck the truck to get the insurance money to make a truck payment dont ya.

I'm not just another pretty face.....thats smart think'en

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This is what deregulation does.. it always looks so good and so inviting on the front end..

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I could say the same thing about excessive regulation too.

Let me make this perfectly Clear .. You roll up your sleeves my friend & more power to you .. If I choose to be a voice of decent right from the get go ; that's just me .. There are no painless answers to the problems that both Big Biz and Labor ( in unison ) have forged in this Country .. The USA. has always been a resilient Country and People .. The fact is I am the one with more faith because I will place it differently .. Hey we still be Amigo's

This, on the surface, is a good and solid approach... and WAY better than the bailout garbage we've seen for Wall Street.
This is keeping people on the hook and responsible for what they owe, but having the grace to restructure things so that they can afford to keep it.

It perhaps isn't ideal, but it is a Win-Win that could finally put a floor underneath the housing industry.... and it ISN'T something that will be costing the taxpayers.

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Hey we still be Amigo's

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You betcha... wouldn't want it any other way....

But you have your opinion on the subject, I have mine.. I voted for Obama,, I think he can produce something close to the desired results.. so maybe it only stands to reason that I'm willing to give the guy a chance to sit in the chair before singing the blues about the mess this country is in...

But that's just me being me... nothing new about that

But make no mistake about it, I understand that problem and it bout scares me to death.. SO whoever gets in there is gonna ask us to make some changes... and we ought to maybe think about doing just that..

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I could say the same thing about excessive regulation too.

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Indeed, that is equally true.. no question about it..

That's why I'm hoping what I'm hearing about Obamas methods are true... Govern from the center out to both left and right as needed and as he finds appropriate.

Probably the only way a balance can be achieved... IMO

Five Lessons from the Second AIG Bailout
Posted Nov 11, 2008 09:49am EST by John Carney in Newsmakers, Recession, Banking
Related: aig
From ClusterStock, Nov. 11, 2008:

The news that the Treasury Department and the Federal Reserve caved in to AIG's demands for a more generous bailout is a bad omen for bailout. It shows every company involved in the bailout--from investment banks, to commercial banks, to private banks, to insurance companies, to automakers--that they should take the money now and not worry about the strings attached or the costs: those can always be cut later.

The original $85 billion bridge loan facility to AIG was officially intended as allowing for an orderly sale of AIG assets. Behind the scenes government officials were saying that this wasn't a rescue of AIG, it was a liquidation. AIG was going to pay hefty interest on the loan, partly to make sure taxpayers would get a return for their investment in the company and partly to get AIG to pay off the loans as quickly as possible. It only took AIG two months to rework the deal into a long term loan with a relatively low interest rate. What's more, the government is now going to buy up assets, cancel liabilities and make an equity contribution.

What are the lessons for other recipients of bailout bucks?

First of all, don't worry about the promises you've made to the government about dividend payments. When the going gets rough, just explain to the government that you can't afford to make them.

Second, don't worry about restrictions on bonuses. You'll be able to recut this deal later. Just tell the Treasury you'll lose your key people if you can't pay them well enough.

Third, don't worry about limits on dividends to shareholders. Simply claim that those restrictions are preventing you from raising necessary private capital.

Fourth, don't worry about restrictions on what you can do with the money. Don't make loans under pressure from the government. Don't sell off troubled businesses. Make acquisitions. Invest in Chinese infrastructure. These Treasury guys are spineless. They'll never stop you. What's more, government officials have no upside incentive to police you. This is basically unencumbered cash.

Fifth, there's always more money. Once the government has invested billions in your business, the marginal cost of adding additional dollars compared to the loss from your failure guarantees that you'll always be able to get more money from the government.

Congratulations to everyone on your future ability to recut the deal with the government. And when we say "everyone" we mean everyone except the taxpayers. You're out of luck.

Link O Matic

Just read on Yahoo News that Pelosi want to offer a bailout plan to the American Auto Industry too ... well so much for responsible spending under new party leadership.

Auto industry needs help in the bail out, is it right no, is it reality Yes, If the automakers go under it's gonna be almost impossible to bring back this economy. Millions of job will be lost the goverment is gonna spend that money one way or another, either on a bailout or on unemployment for the millions who will lose thier jobs, so they might as well spend in the hopes of keeping some Americans still working.

goverment needs to control these loans and they are not, Obama needs to stick a couple people if federal prison from AIG for mispending on this money,

But ya know what, I havent heard to much of the american tax payers screaming a bit...h about it, we cry & moan and it's not right, but how many have written thier congress person, how many have e-mailed them, we can cry all we want about it not being fair but until we tax payers do something it an't gonna matter.

I do believe no matter who is or is gonna be president we need to help the auto industry.

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Just read on Yahoo News that Pelosi want to offer a bailout plan to the American Auto Industry too ... well so much for responsible spending under new party leadership

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I grant you that some of the automakers problems are home grown.. no question,, but what would the alternative to loaning them money be? It's an ugly thought..

Oh,, and don't confuse bail out with a loan... Pelosi may have called it a bailout, but I believe that Obama called it a loan.. I don't like either, but again,, if I had to chose, I'd take the Loan Method..

Anyway, what's the alternative.. let them fail.. put 3 million people out of work.. yup,, that's sounding really smart.

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goverment needs to control these loans and they are not, Obama needs to stick a couple people if federal prison from AIG for mispending on this money

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Now you are talking.. If we are going to loan them money (be it a loan or true bail out) then the corporate officiers need to be held accoutable. If not, then it's good money after bad and that doesn't make sense..

I sure hope Obama gets that...

There are two automotive industries in the US. One is Midwestern and Union dominated. This is in big trouble.

The other is Southern and mostly European and Japanese models. They are not Union and are not in nearly as much trouble.

I think the UAW has to be held accountable for any bailout as well. Let's see these workers go to 401k plans, instead of a fixed benefit pension, for one. Most Americans don't have the luxury of a pension plan or retirement health benefits anymore. I sure don't want to pay for these guys' pensions when they don't contribute to their own retirements like most Americans.

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I think the UAW has to be held accountable for any bailout as well.

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You are right about that...

There was a time when Unions were so needed.. it's really not like that anymore..

I see the union guys pleading for us to buy american... and believe me, I want to.. in fact I did.. But dang it all, Hondas, Nissans, Toyotas are just better built cars.. If I gotta spend it, it's hard to overlook that fact.

Oh and please, let's not get into all the "initial quality" talk... you don't want to ever go down that path with me

Lets talk about "initial quality"

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Lets talk about "initial quality"

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50,000 comedians out of work and you wanna try to be funny

Just kidding with ya bud.,.,, Given the industry you are in, you already know what I'm talking about.... I know you do.

I dont disagree with your assesment at all, Without me getting into a day long discussion, I'm all for the big three reorginizing debt, or tossing the CEO into prison or redoing many of the Union agreements.

I have working in the Auto industry for about 25 years, so I'm not just shooting form the hip...LOL, alot of people and small buisness will close if the Goverment dosent help, Should the goverment just hand over the money without restrictions on how it's used.....HELL NO, it needs to be distributed wisely, which I'm not experianced enough in money managment to decide that, but also if it's not used every penny of it correctly, those responsibly must pay it back or spend time in prison, & I mean prison not Executive Cozumel Beach Prison, I mean normal everyday tax payer prison.

Thats why I am working on my jokes, I could be looking for work




O LORD I'm doomed either way

Here is a partial list of those that will be affected if the Big Three go under:

The Autoworkers (union workers)

Salaried Employees

Non Union Hourly employees

Consultants to the Big Three (the auto industry uses a large number of temporary engineers, Designers, drafters etc etc and they aren't reflected in the head counts you hear about.. but there are thousands of them)

Outsourced design services

Truckers that haul the cars and car parts from one place to the other

Railroad people that deal with trainloads of raw materials as well as finished products

Ancillary delivery services such as FedX, UPS, Natural gas, electricity, water, etc etc that have large chunks of Auto Industry business.

Parts makers... Anyone that works for a company that makes anything for either the manufacturing of cars, such as conveyor systems, welding systems or parts such as bolts, nuts, screws, wire, radios, CD Players, Speakers, brackets and connectors etc etc. (that list could go on for miles)

Then you have the dealers... what is it they will sell to us... USED CARS only.

I would say that 80% of the dealers will close,, the 20% remaining will gouge the hell out of us..

Let's not forget the guys in the dealerships that fix cars.. those are decent paying jobs.. Many of them will be gone.. and if there are fewer jobs, the remaining employers will be able to get away with cheaper wages.. That will get the economy rolling won't it?

Then there are those expressly involved with financing of car sales... There will be a lot less of them needed.. that's a bunch of jobs..

While I hate that we have to loan the Big Three money.. it grates on my nerves and angers me to no end... The alternative is so much worse that I don't even want to think about it.

Right now, we have our choice of cars not only made in america but by american companies.. Tomorrow, that may not be the case.. I find that thought to be revolting.

So saying it's bad for America to loan the big three money all you want.. look at the alternative and tell me that's better..

it's time to stop the blame game and get on about the business of fixing business......

I don't want ownership in a company that Deutsch Bank has placed a value of $0 per share. Yes, $0 per share for GM.

I don't want to lend money to an entity that is unable to pay it back. This is how the whole mess started.

So, if ownership is worthless in a company that can't pay back a loan, how much do you want to give them? and for how long? $25 billion isn't nearly enough for one quarter with these three. It will all be gifts to keep some people (management and union) making more than they are really worth for a while longer.

Unless the unions make massive concessions to their antiquated business model, the Big 3 are dead men walking. Our current economic problems only accelerated the inevitable.