States, banks reach foreclosure-abuse settlement

[Gaspar]

Wow, it's pretty cheap to buy influence from the president.  I wonder what I could get for $5000?

You could probably get a subsidy to start that fart-powered car company you've always wanted.

[Conan71]

You could probably get a subsidy to start that fart-powered car company you've always wanted.

Wouldn't you love to see what happens when you take a sharp curve at 50 MPH in that klunker?

[nathanm]

What I heard on CBS the other morning was that Fannie & Freddie are not parties to the settlement. 

That they aren't party doesn't mean it won't affect them and the rest of the investors holding MBS on mortgages that will have principal reductions.

And to answer your other question, the obligatory Top Gear video:

[Teatownclown]

[Conan71]

What's the credentials of the guy with the lithp, or is he just another blogger with an opinion?

I really don't see the difference either way on the point he made about the write-downs.  The banks take a loss for taxes whether they foreclose when they are $100K upside down on a $400K loan or whether they do a voluntary write-down.  They end up saving the foreclosure costs, assuming the occupant can still afford to pay for the house and the note is re-calculated at a new payment amount reflecting the lower principal.

[Conan71]

That they aren't party doesn't mean it won't affect them and the rest of the investors holding MBS on mortgages that will have principal reductions.

And to answer your other question, the obligatory Top Gear video:

I laughed until I had tears rolling down my cheeks.  Good vid.

[nathanm]

The banks take a loss for taxes whether they foreclose when they are $100K upside down on a $400K loan or whether they do a voluntary write-down.

They haven't been doing voluntary writedowns, though.

What makes this more confusing is that in most cases the banks themselves don't own the loans, all they own are the rights to service the loan and charge fees to the MBS holders for that service. As long as they generate more fees for themselves by foreclosing rather than modifying, that's what will happen, even if it's not in the best interest of the MBS holders or the country as a whole.

That, incidentally, is why Fannie and Freddie are going to take losses because of the settlement despite not being party to the lawsuit. In most cases, the servicer gets to do pretty much whatever they think is best when it comes to principal mods, term changes, and the like, while the owner gets to sit back and take it in the shorts as the banks get credit for impairing other people's assets.

[Teatownclown]

We will start to see Bank lending regs similar to utilities....actually Banks becoming utilities seems likely as their loans will be backed by the US Government to insure they don't let another melt down happen.

[Townsend]

Attorney General Pruitt blocks millions in aid to Oklahomans facing foreclosure

http://www.tulsaworld.com/facing-foreclosure/collection_531d2556-3757-11e3-a450-001a4bcf6878.html

Attorney General Scott Pruitt's decision to cut his own deal with banks accused of deceptive mortgage practices meant Oklahoma was the only state in the nation not included in the national program. The World's analysis showed while direct payments to homeowners were larger than the national program, the relief in Oklahoma reached far fewer people than it could have. Much of the money still remains unspent and many who could benefit are unaware relief is available. Additionally, Pruitt's decision to go it alone left as much as $10.1 million on the table that could have helped victims of unfair foreclosure practices.