Wait and See
Attendees at the Mortgage Bankers Association's National Servicing Conference in Tampa generally were taking a wait-and-see attitude on President Obama's plan to help stem the avalanche of foreclosures overwhelming servicers currently.
Participants in a roundtable we ran at the meeting had numerous questions about the specifics of the plan and if it was designed by people who had any feeling for the servicing specialty.
The MBA, however, had a generally good reaction to the plan, which would cost $75 billion to modify mortgages and include $200 billion for the balance sheets of Freddie Mac and Fannie Mae to help them refinance current customers by lowering their interest rates.
MBA's John Denney, associate vice president, public policy, told us the plan "will enhance servicers' ability to help borrowers in trouble and those who may be on the edge of trouble." He questioned, though, whether $75 billion will be enough to do the job.
MBA is pleased, though, with incentives to servicers contained in the plan and a proposed public-private buy-down to a 31% debt-to-income ratio to help borrowers afford their loans.
MBA remains opposed to the proposed judicial cramdowns in the plan and would only make exceptions for certain vintages of subprime mortgages.
We think the president's plan, while ambitious and a little unwieldy, is an excellent start towards adding in homeowners to the groups being bailed out in this pernicious crisis.
Those objecting to subsidizing their neighbor's bad choice of house or mortgage might consider how insignificant that is in comparison to the bailouts of incompetent banks deemed too big to fail. Your neighbor's foreclosure will also lessen the value of your own home.
The workout plan is bound to be one of the most discussed issues by servicers at the upcoming Mortgage Servicing Conference MSN is co-sponsoring on April 6-7 in Dallas.
The MSC, sponsored by our affiliate SourceMedia Conferences, will feature sessions on mods, REO, foreclosures, loss mit and many other hot-button areas.