Help coming for mortgage payments? FDIC head Sheila Bair recommends at least a 25% reduction in mortgage payments.
October 28, 2010 Leave a comment
According to Fox business and The Street FDIC (Federal Deposit Insurance Corporation) head Sheila Bair is asking for at least a 25% reduction in mortgage payments on properties that are going into foreclosure. She said this at a symposium on “Mortgages and the future of housing finance”. She appears to be asking for this mortgage rate reduction because of the robo-signing scandal where bank employees sign foreclosure documents without reading them.
The banks are trying to downplay the robo-signing calling it just a failure to dot some “i”s and cross some”t”s but I think it is much bigger than that. The banks seem to not care about doing modifications for their borrowers. They seem to be processing these foreclosures as fast as they can. The incentives seem be there for them to go through with foreclosures instead of them trying to keep people in their homes.
My clients are having trial modifications declined without notice and for no reason when they are making the payments on time for many months. Others are being told they cannot afford a lower payment when they are making a higher one. Each time you call the bank you get a different person who has a different story. And they continually lose documents that you send them. That does not sound like an organization that is functioning properly.
Fed chairman Bernake has said that the Fed is working together with the Department of Labor, Treasury, and the FDIC to stem the foreclosure crisis. Hopefully, with all of these government agencies, something good will come out of this for mortgage holders in default who don’t want to lose their house. After all they are from the government and they must be here to help.
Bair at the FDIC is asking for a 25% reduction in your mortgage payment or some “safe harbor” for those who can’t make the payment. Will this get done? Will something else happen? We don’t know but stay tuned because there is tremendous political pressure out their for some relief. The sheer volume of distressed homes is overwhelming and I think everyone realizes that here has to be a solution other than mass foreclosures.
Stay tuned for the next shoe to drop. I have a feeling its coming soon…..
I am a bankruptcy lawyer practicing bankruptcy law in San Diego.
Please visit my website and blog at: www.farquharlaw.com