Foreclosure Moratorium Would Be 'Catastrophic,' SIFMA Says - HuffPo

[WillyT]

Foreclosure Moratorium Would Be 'Catastrophic,' SIFMA Says
William Alden First - The Huffington Post
Posted: 10-11-10 05:27 PM | Updated: 10-11-10 05:31 PM

<snip>

Halting foreclosures across the nation would be "catastrophic" for the economy, a financial industry trade group said Monday.

Tim Ryan, CEO of the Securities Industry and Financial Markets Association, released a statement in which he warned that stopping foreclosures nationwide would cause far more harm than good. His statement comes three days after Bank of America, which Reuters' Felix Salmon points out is a member of SIFMA, announced it was halting its own foreclosure proceedings in all 50 states. Last month, JPMorgan Chase and Ally's GMAC said they were stopping foreclosures in the 23 states where foreclosures are processed in court.

"It would be catastrophic to impose a system wide moratorium on all foreclosures and such actions could do damage to the housing market and the economy," Ryan said in the statement. "It must be recognized that the mortgage market, investors and the health of the economy are all inter-related."

Salmon, of Reuters, says Ryan's statement obscures the true problem by exaggerating the consequences of a foreclosure freeze. Mortgage servicers' first priority should be to resolve the shoddy paperwork issues, and a moratorium might actually help them do that, Salmon says. He adds that it's not clear a "system wide" moratorium would hurt the housing market in a significant way.

<snip>

More: http://www.huffingtonpost.com/2010/10/11/foreclosure-moratorium_n_758478.html

Sounds like they are getting really worried. Good!

:kick:

[DJ13]

1. The banks already have a massive shadow inventory, they dont need more immediately

They should freeze ongoing or pending foreclosures and spend this time going through the paper work on existing shadow inventory to determine if they have a legitimate claim to sell those properties..... before future home buyers find out the bank had no title on the house they already bought.

Straightening out the existing inventory first will give them properties to sell while they work on straightening out the pending foreclosures.

[slackmaster]

4. That wouldn't solve the root problem from their perspective, which is defaults

If the customer isn't making payments, it doesn't make any difference whether the mortgagee has foreclosed or not.

[Autumn]

2. K/R Thank you for keeping

up on this.

[SoCalDem]

3. However

It could spur an increase in refinancing for people who are stuck in homes they cannot afford to sell. There have to be some people out there who did not re fi to the low rates that are still available.

I would like to see a re-fi wave that did NOT offer "cash-out" though. If lenders are not going to cram-down principal, perhaps they could "invent" a new loan...a 45 year-fixed/4% max interest . This would lower the monthly rates for millions of people and would give the market some breathing room.

[taught_me_patience]

5. Lenders will not reduce principle

because if they start doing that, they'll have a tidal wave of current owners asking for them too (and rightly so).

[SoCalDem]

7. That's why my proposal did NOT have them reduce the principal

it stretches out the length of the loan...makes it fixed rate and dis-allows cash-out.

[taught_me_patience]

9. The problem is that there is a very high incidence of redefault on mortgage mods

Would you, as a lender, lend money for 45 years as 4% (no) to somebody very highly likely to re-default (no)?

Also, when people are 40-50% underwater, they will strategically default anyway.

[Chan790]

13. Fixed-rate's a no-go.

The rates are too low.

I work for a bank branch and we send the applications into a processing and approval office for loans and mortgages. I have not seen a fixed-rate mortgage approval in months, even on perfect credit and high down-payment (20%+). We're not allowed to say we're refusing to issue fixed-rate loans...but my impressions are that we're not issuing fixed-rate loans, not until that fixed-rate is more profitable.

Every application comes back with a lovely counter-offer of a low APR (depending upon creditworthiness) ARM with no max-cap. I wouldn't take that loan. No max-cap means that we'll get up to an interest rate that suits us eventually and then happily offer a fixed-rate refi (with cash out) more amenable to us than 4%.

[SoCalDem]

14. I was offered a 30 yr fixed @4.24%..no fees

We are remodeling, so I could not accept it, but I will call the guy back when we are done & see if he can re fi for us..

We have $158K remaining @5.91

We are paying an extra #2k a month on principal , in hopes of paying this beast off before my husband retires in a few years:)

we also have no credit card debt/no car payments

[Pathwalker]

17. My Mortgage Co. offered us a fixed rate refi. Good rate, 20 yr, and we

turned them down after they sent us the 43 page loan agreement. It was so bad we decided to keep our current 6 page, higher rate loan instead. They won't stop calling, offering us 90% of it's CURRENT value. You think it has anything to do with the fact that we owe less than half it's CURRENT value?
I do - they're one of the big 5.

[librechik]

6. weeding out the frauds from the practical folks

Fun!

[joeybee12]

8. Examining the foreclosures will lead to examining the actual mortgages which

actually might lead to the truth of this whole mess.

[formercia]

10. Banks: Too Criminal to Fail

Next, the Banksters will threaten 'Mutual Assured Destruction.'

"Take us down, and we will take all of you teeny piss-ants with us."

[larryo]

15. Didn't they already do that?

Was that not the reason for the first TARP?

[glitch]

16. That's next? I thought they'd already done that when they demanded TARP

or they'd take down the global economy.

Not that they still won't, that particular threat apparently has infinite potential. You know, like a protection racket.

[ljm2002]

11. In other words:

"WHAT? You want US to obey the laws regarding ownership of real estate? What the F---? Why that will CRASH the ECONOMY! Quick! Change the law!"

[The Magistrate]

12. What Is Catastrophic, Sir, Is Systemic Fraud, And Its Covering Up

Confidence in the system cannot be restored until the confidence tricksters staffing it are jailed.

[WillyT]

18. + 1,000,000,000... What You Said...

:applause::applause::applause:

:hi:

:kick:

[xchrom]

19. Meh - tempest in a tea pot. Let the moratorium go through -

Let the motherfuckers FAIL who can't figure it out
And JAIL the serious fraudsters.