Steven Pearlstein | Mass Refi’s and Granted Immunity from Lawsuits Stemming from Loans Issued During the Bubble

Steven Pearlstein: How about Refi.gov

The best proposal I’ve seen comes from Glenn Hubbard, a former economic adviser in the Bush White House, Chris Mayer, his colleague at Columbia Business School, and Alan Boyce, a trader in mortgage bonds. The trio’s idea is to order Fannie and Freddie to reduce its fee to a flat 4 / 10 of a percent for refinancing any fully paid-up loan that it already guarantees. The process would be streamlined, eliminating appraisals and income verification. The fee would be lower than now, but higher than it has been in normal times, and sufficient to offset the reduced monthly cash flow from refinanced borrowers.

As for the banks, those that accept a lower refinancing fee of 3 / 10 of one percent would be granted immunity from lawsuits stemming from loans issued during the bubble — a huge cloud that hangs over the big banks. Those who refuse the arrangement would lose their ability to sell their mortgages to Fannie and Freddie, which are pretty much the only games in town since the housing bust began.

The big losers would be the private holders of mortgage bonds — mostly pension funds, hedge funds and other money managers, along with foreign governments — who might take solace in the fact that they have enjoyed three more years of interest payments at the old, higher rates than they would have if the Fed’s monetary stimulus had been allowed to pass through to homeowners.

Full column here…

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4closureFraud.org

 

 

Comments
10 Responses to “Steven Pearlstein | Mass Refi’s and Granted Immunity from Lawsuits Stemming from Loans Issued During the Bubble”
  1. talktotennessee says:

    Well, the banks have feelers out, bargaining for ‘immunity’ or amnesty now. I saw this one coming a mile off but their bid may fall on deaf ears for investors and homeowners alike. Banks still have hopes the AGs will come through and bail them out of the mess with investors, leaving them free to wheel and deal. Servicers have hung their hat on investors for a long time, telling homeowners they can’t modify loans because investors wouldn’t permit. This is a lot of hogwash. Investors don’t care much about individual mortgages, they are looking at yield or return for the mortgage bundle derivative bond or product. There is a disconnect here that the banks, as servicers, have deceived both sides, investors and homeowners. To let banks walk free now will be worse because investors are not going to take back and separate their mortgage collateral into individual mortgages and modify them. Can you imagine the chaos that would cause! These investors are dealing in PAPER, not homes. The banks will retain servicing and disposal. AND I do mean DISPOSAL! People just think there is a problem with housing now. They need to listen to people in the housing industry. REOs are deflating normal markets, flattened them.. Building is non-existent. At this pivotal point there could be stabilization in normal marketing, even though value has lost significantly, 20-50% in some markets. Considerable reduction in foreclosures is the only way to stabilize the market. That would mean principal and interest reduction with some money fronted by the industry to bridge the length of default. IF these things happen there could be a shortened recovery. There should be no amnesty without these actions to reduce principal and interest. The bleeding has to stop. If banks dump their massive shadow inventory on the market as REOs, you will see major hemorrhaging in the housing market that will be unprecedented. You think it is bad now but nothing to what it will be when banks receive immunity from litigation. Also translated to immunity from criminal risk.
    The people making decisions need to think this through!
    What do you do with millions of homes flooding the market as REOs, eclipsing normal market sales, at a time when credit is largely unavailable, unemployment at an all time high and people NOT buying or can’t sell their home to buy because the one they want to sell is underwater. I kid you not, this is happening NOW! There are fewer and fewer buyers out there and banks are liquidating their REOs right NOW for 40-50% of what would be normal market value if normal was a reality. Liquidation value is below replacement cost. This is why builders can’t compete with new home sales.
    I sometimes wonder what Washington has between their ears in the way of gray matter!

  2. Michael Olenick says:

    Immunity? In exchange for what? People are allowed to refi their homes, and most of these loans are old enough there isn’t a prepayment penalty. The original banks and trusts can’t do anything if their borrowers decide to refi their loans at a lower rate and finds a willing lender. Banks have already received way to many incentives; this one is especially galling because there’s no reason for the old lender to be in any sort of decision-making role.

    Implement this without immunity. Give people an option to refi to a lower interest loan and, if they choose to do so, there isn’t anything the old lender can do about it.

    • lvent says:

      I say NO ONE should settle for anything less than a principle write down of half of the current market value……and a whole new mortgage and a whole new note at zero interest rate…you know, the same rate the Fed loans Wall Street “money”…..You would have to be nuts to refi these unsustainable fake, fraudulent loans………..and we will sign no WAIVERS, of bank liability in the event of fraud by them……AND THE BANK MUST SIGN AN AGREEMENT THAT THEY WILL NOT COMMIT FRAUD IN MY NAME OR THE LOAN IS IMMEDIATELY RESCINDED…..CLEAR TITLE GOES BACK TO THE HOMEOWNER…..

      • lvent says:

        On a 30 year fixed that would be in my case, approx. $1500.00 a month with the taxes., which is 500 a month more than they deserve….

      • housemanrob says:

        Vent…Nobody should settle at all…..stop paying mortgage debt, credit card debt and all bank debt …..they all go broke, we win, game over. Most all other plans take power and money and the wheels of this huge crime machine has all more than half of what capital there is in the whole country. We must all find the strength to close our accounts and stop feeding the beast!

      • lvent says:

        I agree Rob, no one wants this evil empire to die more than me….We all deserve a clean slate and a clear title back to all of us……There is soo much corruption….the judges are throwing the people to the wolves if you won’t comply with the Judge and the mediation with the crooks the Judge will steal your house….at least this is what I am seeing in my State…You can’t find an attorney who is not working for the evil empire…..I haven’t given up…believe me Rob……but a principle write down of half of the current market value is better than the alternative for most people……At least we know what we have here in our own homes…..we built our house in 1992….I sure as hell don’t want to have to go out and buy someone elses problems….

      • lvent says:

        Rob, since the Rahmfather took Chicago over this State is becoming more and more of a tyranny everday….The whole attitude has changed from the AG’s office to the Recorder’s office….Now he wants to fine parents of kids caught out past curfew $500.00 for the first offense, $500.00 for the second offense, and $1500.00 dollars for the third offense….He wants longer school days for students and teachers…he is a taking 1000 police officers off of administrative duty and putting them on the street even though the crime rate is down….Then Quinn, the Governor well, he is even more despicable than ever since the Rahmfather took over…. He wants to realease non-violent illegal immigrants from prison, give free college to illegal immigrans kids……and he vetoed conceal and carry…..and the kicker is, no one I know voted for either of them…….Rahmfather got in with the lowest amount of votes in Crook County history 37%, not even half……and he won??? I think that result deserved a runoff election…My husband and I are ready to move out of this State…and so are many others including the CME group….There is an illegal and unconstitutional tyranny running this state……Mayor Daley predicted an 155 billion dollar property tax increase by 2015 to cover for all of the missing policemen and firemens pension money……We are already paying a G note a month in property tax….This fraud is unsustainable….and I don’t no anyone who is not disgusted with this tyranny anymore…You don’t mind paying a bit more when things are good but when things are this bad, this is just ridiculous…..It is all for the benefit of the criminals and nothing and I mean nothing for anyone else but debt……..

      • lvent says:

        I also find it incredibly disturbing that when there are millions of unemployed Americans out of work, the CEO of Chicago Public Schools, is Jean Paul Brezard, a foreiegner who you can barely understand a word he says..do they mean to tell us there is not a qualified unemployed American with the credentials for that job?…Now the teachers are screaming if they have to stay in school and teach 90 minutes more a day, they want a pay raise…..and Biden is in Chicago now for a 10,000 buck a plate Demorat party fund raiser…..and worse than that Glen Beckler is coming to Chicago for a commie rally…All the devils are here….

  3. leapfrog says:

    Why should the criminal SOB banksters be granted ANY immunity whatsoever?

    • lvent says:

      leapfrog, did you see my post a few days ago about the HUD contract a lawyer who claimed to be working for the people and a fan of Neil Gardner and Max Gardner tried to have me sign? It stated that there were COMPLIANCES WITH HUD THAT I HAD TO AGREE TO IN ORDER FOR HIM TO REPRESENT ME……IN PART, THIS CONTRACT STATES….

      COOPERATION: Client agrees to cooperate with ATTORNEY and agents of ATTORNEY to provide all information requested and necessarty to prerform the HUD and/or FORECLOSURE litigation. Client agrees to promptly respond to phone calls, letters and emails and immediately inform ATTORNEY of changes in contact information. If Client fails to COMPLY, this may be a basis for ATTORNEY withdrawing from the case through MOTION IN THE COURT……..
      NO GUARANTEE: Client acknowledges that they fully understand that when an underlying HUD action an/or FORECLOSURE is eminent or is filed, the Client is making a claim for Predatory Lending and other violations, requesting lender to cure and ultimately seeking all remedies available to the client.
      CLIENT may be able to receive a modification of the terms of the mortgage and then MUST ABIDE BY THE AGREED MODIFICATION.
      CLIENT may have the entire action dismissed, but may have to resume payment under the ORIGINAL OBLIGATION.
      CLIENT may be ALLOWED to remain in the home for the pendency of the lawsuit.
      CLIENT may receive the property with the lien fully released or with a substantial decrease in the obligation, perhaps with changes in terms of the the mortgage.
      Client acknowledges and understands that ATTORNEY makes no guarantees as to the result of the litigation defense and adminstrative filing and modification services.
      INDEMNIFICATION: CLIENT agrees to indemnify and hold harmless ATTORNEY and other ATTORNEY associates, agents and venders, who may have worked on the Client’s file, for liability or claim for damages regarding any breach by Client with respect to this litigation defense procedure.

      HERE IS THE REAL KICKER:
      WAIVER; Some resulting agreements may require the Client to WAIVE ANY RIGHTS TO FUTURE LEGAL ACTION AGAINST LENDER WITH RESPECT TO THE ORIGINAL MORTGAGE LOAN AND SUBSEQUENT MODIFICATION. CLIENT IS ENCOURAGED TO CONSULT WITH AN INDEPENDENT ATTORNEY REGARDING WAIVER OF THAT RIGHT IF AN AGREEMENT IS OFFERED WITH THIS LANGUAGE.
      CLIENT(S) UNDERSTAND THAT THE LENDER WILL BE MAKING A BUSINESS DECISION REGARDING THE PENDING HUD PROCEEDINGS AND/OR FORECLOSURE DEFENSE, AND ATTORNEY HAS NO CONTROL OVER LENDER DECISIONS. LENDER MAY AGREE TO ALL, PART OR NONE OF THE PROPOSALS COMING FROM THE PROSECUTION OF A HUD CLAIM OR DURING THE COURSE OF FORECLOSURE DEFENSE…..

      AND BESIDES THE $750.00 MONTHLY RETAINER AND A $1000.00 SECURITIZATION AUDIT FEE, THERE IS A
      CONTINGENCY RETAINER FEE: If ATTORNEY is able to successfully reduce the principal amount of Client’s loan, then ATTORNEY shall be entitled to a fee equaling 20% of the total amount reduced up the mortgage(s) AND will be wholly dependent upon the financing of the contingency retainer fee AND clients approval..
      This is not only evil but tyrannical and diabolical…They are trying to rope in those who get it using widely deceptive practices on people who just want a fair deal and some justice for themselves and their families who have been wildly deceived since the inception of these fraudulently induced loans.. …. I called and complained to my state AG’s office not only about this but about the fraud in my fraudclosure….Little did I know I was going to get into a screaming match with a woman from that office who told me you signed a mortgage…..and I told her NO I did not sign because I did not agree to that fraud….she told me to file a complaint, I also called and complained to the State’s Attorney who told me to file a police report, I called the IDFPR who told me to file a complaint with them and the AARDP 1-800-826-0625……ALL I CAN SAY IS, BUYER BEWARE….
      I had an attorney tell me yesterday, these criminals are coming for all of our homes…….and there is fraud in eveeryones contract so that means there is fraud in no ones contract……What a bunch of lying b.s…..

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