Mortgage Probe Announced as Foreclosure Prevention Discussed

Mortgage Probe Announced as Foreclosure Prevention Discussed

There is a possible $20 billion settlement in the works with mortgage lenders for the benefit of foreclosed homeowners. However, the government says they’re launching another probe. They state that it shouldn’t influence the outcome of the current negotiation however.

While some analysts are calling the new probe “window dressing” and a political rebranding of previous efforts, the administration states that this new probe will be better than past joint-agency federal probes. Attorney General Eric Holder says that the new watchdog group will have more than 50 investigators and attorneys, and that subpoenas are being sent to 11 financial firms for records related to the buying and selling of mortgages.

The focus of this new group’s investigative efforts is stated to be on the creation of new mortgages to homeowners who couldn’t afford them, and the buying and selling of those mortgages.

At the same time as these investigations are underway, the Obama Administration is taking another shot at preventing foreclosures. Two of the main initiatives are:

• Expanding HAMP to borrowers with higher debt loads.

• Tripling the incentives paid to banks that reduce loan principals.

• Incentives are now being extended to Fannie Mae and Freddie Mac, previously not part of the incentive program.

While many have called HAMP a failure, as it hasn’t helped nearly as many homeowners as planned, the following changes are expected to improve HAMP and provide homeowners with more relief:

• The debt-to-income ratio limit of 31% will be eased, though it isn’t stated by precisely how much. The new guidelines will allow for more flexibility.

• Rental property owners, previously excluded, may be allowed to qualify under new rules.

• The new HAMP will pay between 18 cents and 63 cents for every dollar that lenders take off the mortgage principal, up from the previous 6 to 21 cents.

• Fannie and Freddie will now participate in these incentive payments if they allow servicers to forgive principal in conjunction with a HAMP modification.

One objection to these new rules is the fact that some subsidization of rental property owners is considered suspect at a time of rising rents.

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Relief for Homeowners?? HA!

it looks to me as it's more about incentives for the banks and now Fannie and Freddie too???!!!

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Valerie

“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss

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Where is this 18 to 63 cents

Where is this 18 to 63 cents coming from.