Chief
12-14-2007, 06:56 PM
http://www.ksl.com/?nid=172&sid=2042214
NEW YORK (AP) - If the government really wants to stop home foreclosures from surging, here's a simple plan: Boost Americans' income, put more funding toward medical research and insist on marriage counseling for all. And then start buying up land to raise housing prices.
As far-fetched as all that may sound, such efforts would do more to curb default rates than the Bush administration's plan to freeze adjustable mortgage rates in the coming years for a limited number of subprime borrowers.
Data from Countrywide Financial Corp., the nation's largest mortgage lender, backs up this point. The No. 1 reason its customers have been defaulting on mortgage loans is because their income was cut. That accounted for almost 60 percent of its loan defaults in the first 10 months of this year; add in sickness and divorce and the total jumps to more than 80 percent.
Way down on the causes-for-foreclosures list at Countrywide _ just under 2 percent _ is a payment adjustment.
In other words, there's little evidence so far that the mortgage mess is a product of cash-strapped home owners being crushed by resets on adjustable-rate mortgages, or ARMs, that send their monthly payment soaring.
**SCHNIPP**
I put this up tonight as I hear on the evening news that the US Senate has passed a plan to expand FHA loans to subprime borrowers who are facing foreclosure. As I understand it, the plan would raise the amount FHA can guarantee up to $415K with as little as 1.5% down...
I don't see how any of the bailouts that Congress is considering will address the real problems. Letting these people who cannot afford the loans they have right now, borrow even more money, guaranteed by the taxpayers this time, solves nothing. I still contend that many of these people deserve foreclosure, and in fact foreclosing them quickly and getting a paying homeowner in that house is the best thing for the neighborhood. The fact is that the Gubment has pushed home ownership over the years to where something like 70% of private citizens own a home. That's very high, and could not be if lending standards had not been dangerously loosened over the decades.
All we can hope for at this point is for stiff qualifications standards for people to qualify for these loans, but I'm betting that the taxpayers still end up eating a ton of this money due to defaults within ten years. This is a 60 Minutes story in the making...
NEW YORK (AP) - If the government really wants to stop home foreclosures from surging, here's a simple plan: Boost Americans' income, put more funding toward medical research and insist on marriage counseling for all. And then start buying up land to raise housing prices.
As far-fetched as all that may sound, such efforts would do more to curb default rates than the Bush administration's plan to freeze adjustable mortgage rates in the coming years for a limited number of subprime borrowers.
Data from Countrywide Financial Corp., the nation's largest mortgage lender, backs up this point. The No. 1 reason its customers have been defaulting on mortgage loans is because their income was cut. That accounted for almost 60 percent of its loan defaults in the first 10 months of this year; add in sickness and divorce and the total jumps to more than 80 percent.
Way down on the causes-for-foreclosures list at Countrywide _ just under 2 percent _ is a payment adjustment.
In other words, there's little evidence so far that the mortgage mess is a product of cash-strapped home owners being crushed by resets on adjustable-rate mortgages, or ARMs, that send their monthly payment soaring.
**SCHNIPP**
I put this up tonight as I hear on the evening news that the US Senate has passed a plan to expand FHA loans to subprime borrowers who are facing foreclosure. As I understand it, the plan would raise the amount FHA can guarantee up to $415K with as little as 1.5% down...
I don't see how any of the bailouts that Congress is considering will address the real problems. Letting these people who cannot afford the loans they have right now, borrow even more money, guaranteed by the taxpayers this time, solves nothing. I still contend that many of these people deserve foreclosure, and in fact foreclosing them quickly and getting a paying homeowner in that house is the best thing for the neighborhood. The fact is that the Gubment has pushed home ownership over the years to where something like 70% of private citizens own a home. That's very high, and could not be if lending standards had not been dangerously loosened over the decades.
All we can hope for at this point is for stiff qualifications standards for people to qualify for these loans, but I'm betting that the taxpayers still end up eating a ton of this money due to defaults within ten years. This is a 60 Minutes story in the making...