Merits of New Mortgage Aid Are Debated
Critics Say Treasury Plan Won’t Bring Long-Term Relief
By David Cho and Renae Merle
Washington Post Staff Writers
Tuesday, March 4, 2008; D01
The U.S. Treasury said yesterday that its mortgage-assistance initiative helped 45,000 distressed subprime homeowners get new loans in its first month, but a veteran mortgage banker who helps run the program said many of them may not receive long-term relief and could ultimately face higher total costs.
. . . But financial firms have been reluctant to offer generous loan modifications because they have to consider the returns of the investors who buy mortgages and provide the crucial financial backing for the loans, Longbrake said.
“A mortgage servicer’s obligation is to get the maximum value to the investor over the life of the loan,” he said. “If you are going to modify the loan and keep the borrower in the house, the bias is to do that for a shorter rather than longer period of time. . . . There’s a reluctance to do long-term modifications.”
Well, I absolutely agree with THAT!
Let’s just ‘consider the returns of the investors’ for a moment. In order to do that, you have to break the code. It’s a little like WWII. Break the code, find out exactly what the enemy has in mind and then storm the beaches.
What the ‘investors’ have in mind is being saved from the massive fraud that was perpetrated upon them by–oh gosh, is there time to list them all?–basically everyone from home-builders right on down (or up) through the food-chain of duplicity.
What the ‘investors’ don’t have in mind is what is happening to their ‘investment‘ at the moment. What is happening is an ugly little picture that is obscured by the big picture. (Investors tend to be big-picture people)
The ‘little picture’ is people walking away from houses they could never afford and should never have bought, if ‘bought’ is actually an appropriate term. Interestingly, this is happening in gated communities as well as modest suburbs, in big-city high-rises as well as small town America. Then, guess what?
Embittered ‘owners,’ as they walk away are walking away with anything not nailed down (and some things that are). Appliances, fixtures, even carpeting. When they are gone, the scavengers move in, ripping out copper wire, trundling off with air conditioning units, furnaces, garage-door openers, cabinetry.
What’s left isn’t much.
But because those ‘investors‘ that are so difficult to placate, didn’t invest in a particular home, don’t have a direct lien on (or a direct interest in) 920 McMansion Lane, they tend to think in terms of ‘maximum value to the investor over the life of the loan.’ Listen up, guys. The life of the sliced-and-diced McMansions that make up the loan are floating down the sewer.
It’s actually kind of poetic–in the justice department, that is.
The ‘investors’ are finding out what it’s like to become invisible. The poor have been invisible for decades, perhaps even centuries. Now, because their investments are invisible (they couldn’t find their assets with both hands) and they themselves are invisible (bobbing about in the rough waters of pension and hedge funds) they have not yet grasped the true meaning of invisibility.
But the poor know. The poor have always known. To be invisible is to have your home torn out from under you.
That this could happen to a whole class of investors, deceived by fraudulent investment vehicles is refreshing, if not very hopeful. And now the wait begins, to watch the uninformed become aware, to see the reverse-alchemy that follows all that gold turning into destroyed buildings, broken neighborhoods and shanty-towns.
100,000 homes falling into the street? A million? Who knows?
America, deconstructing–and no one going to jail.