I Wasn’t Kidding – NINJA & LIAR Loans Are Still Around – Former Treasury Sec’y O’Neill says “NO MORE SUBPRIME MORTGAGES!”

Former Treasury Sec’y O’Neill says “NO MORE SUBPRIME MORTGAGES!”

By Liz Claman

Can’t put down 20% for a house? TOO BAD, you’re on your own now. Former Treasury Secretary Paul O’Neill joined me on “Countdown to the Closing Bell” exclusively today to talk about a myriad of issues. He has some controversial thoughts on tax hikes for BOTH the rich AND poor, whether the U.S. Auto Industry should be bailed out, and why no one should be issued a subprime mortgage loan anymore.

O’Neill says we all need ‘tough love’ to get us out of this mess.  Please watch all three clips.  Whether you agree with him, here are some fascinating ideas from Paul O’Neill.

SEE THE VIDEOS HERE: http://liz.blogs.foxbusiness.com/2008/11/11/former-treasury-secy-oneill-says-no-more-subprime-mortgages/

Citibank Announces Moratorium On Mortgage Foreclosures – Private Plan That Won’t Cost Taxpayers A Dime

NOT A GOVERNMENT BAILOUT – A PRIVATE ACTION THAT WON’T COST TAXPAYERS A DIME – WHY IS CITI DOING THIS? IT MAKES GOOD BUSINESS SENSE – THAT IS WHY !

Citigroup says it is imposing a moratorium on most foreclosures as part of a series of initiatives aimed at helping at-risk borrowers remain in their homes — making Citi the latest big bank to announce sweeping efforts to try to curtail losses from souring mortgages.

Citi said late Monday it won’t initiate a foreclosure or complete a foreclosure sale on any eligible borrower who seeks to stay in a home if it is the borrower’s principal residence, the homeowner is working in good faith with Citi and has sufficient income to make affordable mortgage payments.

Citi said it is also working to expand the program to include mortgages the bank services but does not own.

Additionally, over the next six months, Citi plans to reach out to 500,000 homeowners who are not currently behind on their mortgage payments, but who are deemed as potentially needing assistance to keep current with their payments. This represents about one-third of all the mortgages that Citigroup owns, the bank said.

Citi plans to devote a team of 600 salespeople to assist the targeted borrowers by adjusting their rates, reducing principal, or increasing the term of the loan, steps known in the mortgage industry as a workout.

Of the four biggest U.S. banks — Citigroup, JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. — Citi has been on the shakiest footing as a result of the mortgage crisis, reporting losses in the past four consecutive quarters while its rivals have managed to post profits. The steps announced Monday are designed to stem those losses.

“Typically the lender loses the most money when a house goes into foreclosure,” said Barry Zigas, director of housing policy at the Consumer Federation of America. “(The lender) takes some kind of loss that’s usually much greater than what they sacrificed through some kind of workout.”

Sanjiv Das, chief executive of CitiMortgage, said, “It is in our interest that borrowers stay in their homes and actually make the payments.”

Citi is targeting homeowners in geographic areas with higher-than-average unemployment and foreclosure rates, primarily in Arizona, California, Florida, Michigan, Ohio and Indiana, Das said. The program is expected to affect about $20 billion in mortgages.

“As the unemployment rate is starting to creep up on us, there is going to be increasing distress in the marketplace,” Das said in an interview with The Associated Press. “It’s not going to distinguish between what type of mortgage they have.”

“There is a huge amount of anxiety among borrowers,” he said. “We will reach out to them before they become delinquent.”

Since early last year, Citigroup has helped about 370,000 families avoid foreclosure, representing more than $35 billion in loans, the bank said.

Citi has avoided negative amortization loans, option adjustable-rate mortgages, and other types of risky mortgages, defaults on which have skyrocketed since the start of the housing bust in the middle of last year. Still, the bank has nonetheless been hurt by the relentless downturn in housing that fed the mortgage and credit crisis, and in turn, the near-breakdown of the financial system.

With defaults mounting, other lenders, including JPMorgan and Bank of America, have also become more aggressive about modifications to mortgage agreements.

But a moratorium only solves so much, according to Zigas. “A moratorium on foreclosure will be effective at stopping foreclosure, it won’t be effective at stopping the underlying reasons of why people are in trouble,” he said.

By taking a proactive approach, Citigroup isn’t waiting until it’s too late to deal with delinquent borrowers, said Steve Curnutte, president of InsBank Mortgage in Nashville, Tenn. However, the problem is growing faster than most banks can handle, he said.

“It’s nearly an insurmountable undertaking,” said Curnutte. “The number of bad loans that they can modify using their resources is being quickly outstripped by the number of new loans that need to be modified.”

More than 4 million American homeowners with a mortgage were at least one payment behind on their loans at the end of June, and 500,000 had started the foreclosure process, according to the most recent data from the Mortgage Bankers Association.

Late last month, JPMorgan expanded its workout program to an estimated $70 billion in loans, which could aid as many as 400,000 customers. The New York-based bank has already modified about $40 billion in mortgages, helping 250,000 customers since early 2007.

JPMorgan also said it will not put any loans into foreclosure as it implements the expanded program over the next 90 days.

Bank of America, meanwhile, has said that starting Dec. 1, it will modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. as part of an $8.4 billion legal settlement reached with state officials in early October.

http://www.chicagotribune.com/business/chicago-big-banks-mortgages-nov11,0,5250204.story?track=rss

Countrywide Lawsuit Settled – Lender to Modify Mortgages In 11 States

 

Published: October 5, 2008
Countrywide Financial has agreed to the largest program ever to modify home loans, as part of a settlement with officials in 11 states, just days after the federal government adopted a giant financial rescue package without any relief for distressed homeowners.

Countrywide, the nation’s largest lender and loan servicer, recently acquired by Bank of America, had been sued by the states over what they said were predatory lending practices. To settle the suits, it will provide $8.4 billion in direct loan relief, affecting an estimated 400,000 borrowers nationwide, while waiving certain fees and setting aside additional funds to help people in foreclosure and relocating.

“Countrywide’s greed turned the American dream into a nightmare for thousands of Californians who now face foreclosure,” said Jerry Brown, the attorney general of California. He led the negotiations for the states with Lisa Madigan, the Illinois attorney general. “Our goal here is to help as many people stay in their homes as possible and get some compensation for those who have already been pushed out of their homes,” he said.

Mr. Brown expects loans worth $3.4 billion to be modified in California, where homeowners have been hit hard in the housing bust.

The Countrywide effort is the most comprehensive, mandatory loan workout program since the mortgage crisis began last year. Congress has proposed various programs, but those measures did not make it into the final $700 billion government bailout. Since taking control of Fannie and Freddie Mac, the two housing giants, the Federal Housing Finance Agency has said it is looking at expanding modifications on the loans that Fannie and Freddie own or guarantee.

After seizing IndyMac, the Federal Deposit Insurance Corporation began a loan modification program that it said could be a template in other takeovers. The agency hopes to help tens of thousands of borrowers whose interest rates are being reset higher in the early stages of that program.

It is encouraging people who have fallen severely behind on their payments or who have defaulted to switch into a fixed-rate mortgage at current rates of about 6 percent. Countrywide has made pledges before to modify large swaths of loans. Late last year, it vowed to help about 82,000 borrowers who were facing higher payments through 2008. But the new program will be mandatory and will be monitored by state officials.

Along with the direct relief, Countrywide will waive late fees of $79 million and prepayment penalties of $56 million and suspend foreclosures on delinquent borrowers with the riskiest loans.

A foreclosure relief fund will be created with $150 million from Countrywide to help borrowers who are four months or more behind on their payments or whose homes have already been foreclosed on. The company will also provide $70 million to help troubled borrowers relocate to rental housing. In all, Countrywide is setting aside $8.7 billion to help borrowers.

A Bank of America spokesman, James E. Mahoney, said that the cost of the program had been anticipated by the company in its acquisition of Countrywide.

“We have worked with attorneys general across the country to resolve the issues relating to Countrywide’s practices,” Mr. Mahoney said. “Bank of America has put our own leadership in charge of Countrywide and have committed to a very different set of business practices going forward.”

Countrywide settled with the states without admitting any wrongdoing.

Under the terms of the settlement, Countrywide will reduce principal balances in some cases and cut interest rates in others. Rates could decline to 2.5 percent, depending upon a borrower’s ability to pay, and remain at that level for five years. Then the rate will adjust to prevailing interest rates charged by Fannie Mae on its fixed-rate mortgages.

The program will focus on borrowers who were placed in the riskiest loans, including adjustable-rate mortgages whose interest rates reset significantly several years after the loans were made. Pay-option mortgages, under which a borrower must pay only a small fraction of the interest and principal, thereby allowing the loan balance to increase, are also included in the modifications.

Borrowers whose first payment was due between Jan. 1, 2004, and Dec. 31, 2007, can participate. The loan balance must be at least 75 percent of the current value of the home, and the borrower must be able to afford the adjusted monthly payments.

“We have created the first comprehensive, mandatory loan-modification program with the largest loan servicer in the country, and it is going to help homeowners stay in their homes,” Ms. Madigan said. “We will use this model when we work with other servicers as well.” She said that approximately $185 million worth of loans in Illinois would be modified under the settlement.

Illinois had accused Countrywide of relaxing underwriting standards, structuring loans with risky features, and misleading consumers with hidden fees and fake marketing claims, like its “no closing costs loan.” Countrywide also created incentives for its employees and brokers to sell questionable loans by paying them more on such sales, the complaint said. In reviewing one Illinois mortgage broker’s sales of Countrywide loans, the complaint said the “vast majority of the loans had inflated income, almost all without the borrower’s knowledge.”

Other states in the settlement are Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington. It is the largest predatory lending settlement in history, far exceeding the $484 million deal struck in 2002 with the Household Finance Corporation.

“This agreement demonstrates the effectiveness of states in addressing predatory lending and other consumer protection matters, proving states should not be pre-empted by federal legislation,” said Mr. Brown.

The program will be administered by state officials who will examine regular reports from Bank of America. The program will begin Dec. 1 as Bank of America contacts borrowers. In the meantime, Bank of America said Countrywide customers can call 800-669-6607 to discuss their loans.

The terms of the settlement do not address Angelo R. Mozilo, the former chief executive of Countrywide Financial, or David E. Sambol, the company’s former president. The states had included both as defendants. Mr. Brown said he would pursue litigation against both men. Neither could be reached for comment.

http://www.nytimes.com/2008/10/06/business/06countrywide.html?_r=1&ref=business&oref=slogin

What? Fannie And Freddie May Not Sell Bad Mortgagaes After All?

Regulator says Fannie, Freddie might sell bad assets

By John Poirier

Reuters
Sunday, October 5, 2008; 2:43 PM

WASHINGTON (Reuters) – Fannie Mae (FNM.N) and Freddie Mac (FRE.N) may sell some bad assets to the Treasury Department but a decision has not yet been made, the regulator of the two mortgage finance companies said on Sunday.

“They are financial institutions that could sell assets,” James Lockhart, director of the Federal Housing Finance Agency, said during a C-SPAN television interview. “Whether they will or not certainly the decision has not been made.”

Lockhart estimated that between 2 percent and 4 percent of Fannie and Freddie’s assets are bad mortgages.

On Friday, President George W. Bush signed into law a $700 billion bailout package for the U.S. financial industry aimed at allowing Treasury to buy soured assets from institutions that have stopped lending to each other as well as individuals and businesses.

The two government-sponsored enterprises, which were seized by the government in early September, own or guarantee almost half of the country’s $12 trillion in outstanding home mortgage debt.

The first asset sale under the Treasury program is not expected to take place for at least four weeks, sources familiar with the financial rescue plan said on Friday.

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/05/AR2008100501056.html

VIDEO: O’Reilly vs Frank – The Fannie & Freddie Collapse – Barney Frank denies everything

VIDEO: Obama vs McCain – Who Fought Fannie Reform

VIDEO: The Bailout & Fannie Mae – FOLLOW THE MONEY

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