FHFA Acting Director Edward DeMarco said in a
recent interview with the Financial Times that several hurdles remain. Notably,
reducing the first lien without addressing the second would unfairly push more
dollars to the big banks that hold those positions. He feels that reducing the
monthly payment instead would be just as good a deal at a fraction of the cost.
From a first lien holder's point of
view, and in the case of Fannie & Freddie,
it might not make sense to write down the first lien if the second lien holder
does not reduce at least a proportionate amount of principal. Think about it.
If the taxpayers – me and you, take the hit on principal reductions and the
second lien holder be it B of A, Chase, Wells or whoever, don’t participate,
didn’t we just improve their position and in essence give more taxpayer dollars
to the banks? Now I’m not anti-bank but I am anti-tax dollar give-a-ways
Now, it's still unknown how many GSE
mortgages even have a second lien, and DeMarco is convinced re-default rates on
forbearance plans and principal reduction plans are similar. But the biggest
unknown is how much moral hazard a program could create. HAMP is for delinquent borrowers, and doing GSE
principal reduction under the program could convince some to strategically
default on their West Sacramento loan. Could be a real interesting turn of
events should this come to pass.
To get a better idea of when your West
Sacramento home will be worth what you owe, log in to www.shortsaleandloanmod.info
for a free estimate or call me today for a free no obligation consultation.
Call me today and sleep better tonight; you’ll be glad you did
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