On January 24, the President Show discussed yet another attempt at fixing the housing market, sort of Mortgage Relief 8.0; this time called the “Broad Based Refinancing Plan”. As is standard operating procedure for the Washington based, I mean Wall Street based, bailouts, the people who need it the most are excluded. President Blankfein must be pleased.
So who won the lottery ticket this time?
First, homeowners with Fannie Mae and Freddie Mac backed mortgages can take advantage of HARP 2.0. This program will undergo some major changes in March, so look for a future post on what those changes are. So if your mortgage is a Freddie or a Fannie mortgage, stay tuned till next month. You may be pleasantly surprised at what is in store.
What if you are a MERS victim and your mortgage is not a Fannie or Freddie loan?
Well, the President Show is “calling on Congress” to pass a new program geared toward these homeowners, managed by the FHA. He seems to be overlooking a procedural hurdle called “Republicans in Congress in an election year” but facing reality is never a strong point. Assuming something gets pushed through Congress, the program guidelines look like this:
- It would be open to all those with non-GSE mortgages (except jumbo mortgages) who are current on their mortgages (loan modification and short sale candidates therefore need not apply).
- Borrower is current on mortgage for past 6 months and hasn’t missed more than one payment in previous 6 months.
- Minimum credit score of 580
- Loan amount does not exceed maximum conforming loan amount (currently $729,500 in California).
- Loan is tied to a single-family, owner-occupied property
Homeowners who meet these very guidelines would be able apply via a streamlined process designed to make it easier and cheaper to refinance. Homeowners must show they are currently employed, but if unemployed and meet other criteria, they would qualify if they present “limited credit risk” not otherwise explained. You apparently don’t need to show a tax return or have the property appraised.
All this is supposed to cost somewhere between $5 and $10 billion. (Recently seen bumper sticker “Nobody tell Obama what comes after Trillion”) to be paid for by additional fees to the TBTF banks. Right. First, the number will be way off if the program works as advertised. Second, the TBTF will simply take the money from Uncle Ben, who will pass the loss on to all of us, so who knows how much this will actually cost in the real world.
So who got cut out of the pie?
The big losers are holders of jumbo mortgages, which is lots of costal California. There’s nothing here for them.
The next losers are people who are attempting to get a short sale or loan modification. Nothing in the program is designed to help people behind on their mortgages.
Regardless of the pile of manure you hear from the President Show, Turbo Timmy, Uncle Ben or the smiley faced DMV rejects you talk to at your mortgage destroyer, I mean servicer, you won’t get either a loan medication or a short sale while being current in your loan. We unfortunately have, at this point, thousands of examples of this in our collective experience. The President Show, Turbo Timmy and Uncle Ben, we are willing to bet, have never attempted to modify a loan or get a short sale; they have President Blankfein’s cell number, which helps a lot in getting the process done.
Finally, if your credit score is below 580, you are SOL.
As a final laugher, the President Show discussed a new “Homeowner Bill of Rights” that is supposed to provide:
- Simplified mortgage disclosures.
- Foreclosure appeals process that prevents conflicts of interest that do harm to homeowners
- 12 months of forbearance to unemployed borrowers.
Let’s be clear here: we have a government of the TBTF, by the TBTF and for the TBTF, and they will say or do anything necessary to shut up the media and get the current crop of sock puppets in Washington re-elected.
The sad reality is that the real Homeowners Bill of Rights are:
- You have the right to arbitrary and capricious decisions on my house by a crew who would not be hired at Burger King.
- You have the right to be lied to, repeatedly, throughout the entire loan modification and short sale process.
- You have the right to have your paperwork lost repeatedly because the people at the other end of the fax machine are illiterate.
- You have the right to have your home foreclosed on even though another department is supposedly processing your loan modification or short sale.
- You have the right to have your home foreclosed on by people who don’t own the loan, cannot prove anyone owns the loan, and are not even sure if they should be servicing the loan.
- You have the right to have the sock puppets in Washington ignore the problem and pray it goes away.
- You have the right to be at the mercy of the TBTF until you are bled dry.
Imagine if this was written after I had a cup of coffee.
