Saturday, December 1, 2007

HELPING WALL STREET SURVIVE AND CALLING IT HELP FOR HOMEOWNERS

Deal in the Works To Freeze Rates on Subprime Loans


Washington Post Staff Writer Saturday, December 1, 2007; Page A01
Mortgage rates for homeowners with spotty credit histories would be temporarily frozen under a nearly completed agreement between top Bush administration officials and a broad alliance of Wall Street's biggest banks, mortgage investors, nonprofits and consumer groups.
. . . A potential sticking point is determining which homeowners would qualify for the help and how much they would have to pay to refinance or freeze their loans, several sources close to the discussion said.
. . . Most borrowers with questionable credit got subprime rates of 7 to 8 percent in 2005 and 2006, federal housing officials said. When the rates reset, they could rise to 10 percent or more. An interest rate increase to 10 percent from 7 percent on a $200,000 loan increases monthly payments by more than $400, to $1,755 from $1,331.
. . . If mortgage lenders agree to freeze the loans at lower rates, investors would lose out on the higher payments promised under the original loans, which could give them grounds to sue the lenders.
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So, let's just check this out, this 'help for the distraught about-to-lose-their-homes" across the nation. On a priority basis, the plan saves
  1. Wall Street
  2. biggest banks,
  3. mortgage investors,
  4. nonprofits
  5. consumer groups
and then, finally, those about to lose their homes. But (and this is important, may be a deal-breaker),
  • not until they decide which homeowners would qualify for the help (possibly sifting out all the inconvenient poor who were suckered) and
  • how much they would have to pay to refinance or freeze their loans (another chance to pass lucrative and ludicrous costs into the profit bucket).
The world out there has packaged and accepted a gazillion mortgages at 4-5% and survived and profited. Suddenly, 7-8% is not enough and the greed factor behind this whole international debacle is likely to sue because the original promise that's bringing on financial collapse isn't going to happen. This is announced as as 'sticking point' in negotiations. We are supposed to see that these pigs at the trough, who brought us to the edge of collapse, actually have a point. Add to that the indignity and inequity of requiring the victims of this usury to pay additional fees in order to enjoy the pleasure and satisfaction of continuing to pay a 40% premium to the mafia who cooked this whole scheme up. Treasury Secretary Hank Paulson and Housing and Urban Development Secretary Alphonso Jackson actually try to palm off this self-serving solution as help for the sub-prime victims. Sheila Bair, the chairwoman of the FDIC advocated a permanent freeze in rates for financially strapped homeowners with subprime loans. No extra charges, no hidden fees, no deciding who and if--a system-wide freeze. But then that would only help the helpless. Paulson and Jackson are more interested in another helping.