JOE NOCERA | To Fix Housing, See the Data

To Fix Housing, See the Data

In Miami recently, I met up with Laurie Goodman, a senior managing director of Amherst Securities. I’d been trying to meet her ever since I’d read an article that she had written in March entitled “The Case for Principal Reductions.” But our schedules never seemed to mesh. So when I noticed that we were both going to be at a conference in Miami, I wangled a breakfast appointment. It was one of the more illuminating breakfasts I’ve had in a while.

The idea of helping struggling homeowners by writing down some principal on their mortgages — as opposed to reducing the interest or reconfiguring the terms to lower the monthly payments — is much in the air right now. Banks loathe the idea of principal reduction; they fear that people who are current on their mortgages will start defaulting just to get their principal reduced. They also don’t want the hit to their balance sheets.

But the states’ attorneys general who sued over the robo-signing scandal have made principal reduction the central plank of the settlement they are close to completing. The settlement will force the big banks to begin a sustained program of principal reduction, and will heavily penalize banks that don’t comply. From what I hear, the goal of the states is to prove to the banks that principal reduction will not cause the sky to fall — and is, ultimately, less damaging to bank profits than foreclosures.

Rest here…


10 Responses to “JOE NOCERA | To Fix Housing, See the Data”
  1. Linda says:

    Who will pay a mortgage loan with “MERS” involved. I AM NOT. Its a fact, there a no assignments at the courthouse– GAME OVER!

  2. CaitlinO says:

    Principal reductions are a good idea on their own merit. They should NOT be included in the whitewash, get-out-of-jail-free state AGs settlement because the banksters have no intention of complying with that settlement any more than they have complied with others.

    • Kathleen Burt says:

      Right. Jaime Dimon already said they’re off the table for Chase. We’ll see if one of the other banks does a couple token principal reductions to claim compliance.

  3. talktotennessee says:

    The reason efforts by Washington to help are failing is because they want to modify or reduce principal for those who are not in default for any period of time or are current on their loans to not anger those who are current. Both sides fail to recognize the remedy would help all parties. They totally miss the main point. There are so many long term defaults, that to foreclose and dump those houses on the market as bank-owned REO liquidation sales will further depress the market causing more underwater loans. Many are held off by lenders now because it reveals their bottom line to investors plus the truth is that banks know many of these houses will not sell because credit is tight and there are no buyers now until they can gain immunity and dump them on the market at prices so low that cash buyers will purchase from foreign sources and purchase will be selective. It is a marvel that there are so few in government or in the banking industry that either recognize the real issues or how to fix them. They need people inside the housing industry and bankruptcy court judges to give them the real inside to how to remedy the problems and level out the market without dropping it into the abyss for everyone.

    • Jack Murmel says:

      Talk, I’m not so sure about that. If my neighbor is way underwater, can’t make their payments, I want his burden lifted, doesn’t matter if I’m in a better situation because I bought 5 years earlier.
      It’s all of us against the BANKSTERS. Remember, the Banksters have always sought to play the 99% off of one another, it’s helps hide their corrupt predation. Banksters get away with everything, the little guy can’t get even get out from under the boot of debt without losing everything.

      • Kathleen Burt says:

        Yes, it’s all of us together. That’s why Bill Clinton’s suggestion of a 4% across-the-board interest rate (for those with Fannie and Freddie who are paying higher rates) has an appeal; it doesn’t distinguish between people who are already underwater and people who aren’t yet but will be if ths turns into a double dip recession. (Those of us who bought before the Boom, and those who bought during it..)

        Nor does it require anyone to drop their fraud case. It would put more money into circulation because mortgage payments would go down, and it would keep property prices from dropping further.

        The banks don’t want to drop interest rates any more than they want to lower principals, tho. Not much. chance they’d agree to it.

    • lvent says:

      talktotennesse, They want another fraudulent inducement…when what is needed is a Nationwide Loan Recission…make WALL STREET PAY THIER OWN DEBTS…THEY ARE 600 TRILLION IN THE HOLE…UNSUSTAINABLE DEBT…NO AMOUNT OF PRINCIPLE REDUCTIOS OR LOAN REFIS OR LOAN MODS IS GOING TO SAVE THEM…

  4. JS says:

    I wonder how many homeowners in default are NOT underwater, ie have equity in their homes. Virtually every program categorically excludes troubled homeowners with equity, from loan modifications. Furthermore the banks see these mortgages as profit opportunities, as they can tap that equity, and see no loss in a foreclosure.

    Considering those with equity are disproportionately older homeowners who have paid into their mortgages for years and/or owned their homes for years, it seems like a great injustice that these homeowners are forgotten, even by those pushing to help troubled homeowners.

    • Kathleen Burt says:

      I’m in the situation you mention. We have have equity, were denied HAMP and forced to take an in-house mortgage or end up in court with the bank. Maybe there’s a way to find out how many of us had to take in-house mortgages, where the interest is exactly the same andwe stll have a fixed loan but the principal went up during the HAMP trial period, and then the monthly mortgage was raised to nearly double the pre-HAMP amount once they rolled back the HAMP surplus, adding it to the principal.

      Something needs to be done for all of us–whether we lost our homes already or we’re going to lose them in the next 2 years!

      • Imanda Waldon says:

        We have been fighting to save our home for 72 months. We have a 62,000.00 mortgage that we have paid on for 18 years. We also have equity. We did not qualify for any government programs to which I am glad at this time. However, we have had to hire another attorney because after CitiMortgage dropped our foreclosure in March 2011 and stated that our loan was reinstated? Well they have offered nothing to us but over $15,000.00 more on top of our prinicipal. We have already paid $11,153.97 for a missed mortgage payment after Hurrican Ivan. And we paid this and our mortgage payment. We arent perfect, the economy has made it real tough to make a living. We have been paying 11% interest. Banks want folks to think we cant afford our homes. What they are not saying is how they let you buy a home that you can never get ahead of the interest rate. We dont qualify for any assistance; we make to much for legal aid; we have spent over $40,000.00 to save our home in just 54 months; BUT we dont qualify for anything! BUT….rest assured……they have taken our money. CitiMortgage even denied ever recieving the $11,153.97 on top of our payments. It took getting HUD involved and then WE had to send in our payment history to Citi. to prove we made all these payments. Well we were served again 10/22/11 and a Citi Home Monitor Rep sat in front of our house last week for about 20 minutes. I could not get to close to talk and get his information because he had a BULLDOG in the vehicle and he was very rude and intimidating. Anyway, I will keep all posted.

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