“Bailout” Rides to Homeowners Rescue
Article by Mark Walters
Can we save both Wall Street and Main Street? Those who are responsible for disposing of 0 billion of your tax dollars assure voters that they can.
An example is now taking place in Arizona and a few other states. Here’s the deal:
Countrywide was facing legal action for its “alleged use of deceptive practices in their mortgage lending business.” Attorneys General in a number of states we prepared to bring legal action against Countrywide on those charges. To head off those actions Countrywide (and Bank of America, which now owns the company) agreed to provide some relief to borrowers with subprime and other adjustable rate mortgage loans.
By the way, they were allowed to do that while admitting no quilt, proving once again that the larger the financial crime the smaller the penalty.
The deal requires the lender to modify loans and adjust monthly payments to levels that are more affordable. Just who will decide what those numbers will be is not explained.
A temporary hold has been placed on any foreclosure action the bank may have been considering for these homeowners. It appears that about 13,000 Arizona borrowers may be eligible for this program. I will refrain from pointing out that Arizona is one of the leading foreclosure states with tens of thousands. Let’s just be happy for any help we can find.
Here’s another sticky point. The loan modifications would be based on what each borrower can afford and some would actually get a reduction in the amount still owing on their mortgage. Who will make those determinations? Will their congressmen and senators have any influence on who gets how much? Will Barney Franks be consulted? Hey, they don’t call it a bailout for nothing!
Wait, what about those who have already been foreclosed out of their homes? Don’t worry, they have not been forgotten. Some of them will be eligible for relocation assistance. What does that mean? Don’t ask me, only a politically appointed government bureaucratic will be wise enough to answer that question.
Countrywide/Bank of America is slated to start the program on Dec. 1, 2008, but many think they will need more time, so the cavalry will ride to the rescue if they can get their horses saddled. The bottom line is that it could take months before most eligible homeowners get a crack at the programs.
Oh yes, one other thing. The bank has announced that it will have a staff of about 3,200 loss mitigation specialists to provide help to all bank customers nationwide. Let’s see, tens of thousands of eligible homeowners and 3,200 office workers. I’m not good at math, but to me that seems to add up to a barrel of homeowner frustration.
I don’t want to seem unsympathetic, but didn’t many of these folks cheat more than a little on their loan applications? Didn’t more than a few pull cash out of their homes to buy luxuries items they really didn’t need? Shouldn’t some of those actions make at least a few people ineligible for these tax supported measures? Yes, probably, but how is your government going to separate the good from the bad