Yet another government program to make honest workers feel like chumps


Former mortgage payers

Former mortgage payers

New rule  lowers principle and interest on mortgages when borrower stops payment for 90 days.

Federal housing regulators took a significant step on Wednesday toward helping borrowers who are falling behind on their mortgage payments — a move that will help more people but also introduce new risks that some homeowners could deliberately stop paying in order to become eligible for assistance.

The Federal Housing Finance Agency, which oversees mortgage finance giants Fannie Mae and Freddie Mac, announced that borrowers who are more than 90 days late on their mortgages will become automatically eligible for a modification to the terms of the home loan. The goal is to reduce monthly payments.

In the past, to be eligible for a mortgage modification, borrowers had to provide documentation they had a financial hardship. They will no longer be required to do so — though providing such documentation will make borrowers eligible for more substantial monthly savings.

“This new option gives delinquent borrowers another path to avoid foreclosure,” said Edward DeMarco, the acting director of FHFA. “We will still encourage such borrowers to provide documentation to support other modification options that would likely result in additional borrower savings.”

The program is only available to loans owned or guaranteed by Fannie and Freddie, which have been government-backed and controlled since late 2008. The relief would come in the form of a reduced interest rate, extended timeline for payments, or other measures.

Some analysts worried that the new program could encourage borrowers to deliberately miss payments in order to become eligible for the program.

“The primary issue is whether this will encourage borrowers to strategically default on their mortgage in order to get the modification. This risk exists because the new program does not require the borrower to demonstrate financial hardship,” Jaret Seiberg, an analyst with Gugenheim Partners, wrote Wednesday. “

Amnesty for illegal entry into the United States, four-years rent free living in foreclosed homes, now, you want a lower interest rate, just don’t pay the bill for three months. Living on the straight and narrow looks increasing like a suckers’ game these days.


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8 responses to “Yet another government program to make honest workers feel like chumps

  1. Anonymous

    A coalition of Blacks, Latinos, Feminists, Gays, Government Workers, Union Members, Environmental Extremists, The Media, Hollywood, uninformed young people, the “forever needy,” the chronically unemployed, illegal aliens and other “fellow travelers” have ended Norman Rockwell’s America.

    The Cocker Spaniel is off the front porch . . . the Pit Bull is in the back yard.

  2. Anonymous Citizenette

    yup, raised with values and a good worth ethic, a lifetime of working since I was 14 yrs old, come take my guns and all my money – it’s all been a complete waste of my life and I feel like a stupid chump.

  3. Libertarian Advocate

    KEWL. Now I don’t have to negotiate with by Bank for a lower rate and a new term, I just twist its arm.

  4. Mickster

    Not too many Freddie and Fannie-backed mortgages in this town..

    • You’re right, so here, defaulters just hire a lawyer to apply a stick to the spokes of the foreclosure machine and stay put for years. And I don’t blame them – if I had to make a choice between keeping my family in their house or handing over the keys to a bank because of the moral obligation to pay my debts as they come due, I’d probably protect my kids. But when you go into some of these homes where the mortgage hasn’t been paid in three years and see the private school stickers, the satellite TV and the new iPads on the childrens’ desks, it’s hard not to wonder what the hell the rest of us are doing wrong.

    • Atticus

      Insanity (doing the same thing over again) coupled with desperation (Japan’s eco policy):

      No cash? No worries. Home lenders ease up rules–no-worries–home-lenders-ease-up-rules-193804515.html

  5. Atticus

    Because the housing “recovery” is bogus. If there was a recovery we’d see interest rates go up bigtime.