Some Interesting Questions About Yesterdays National Mortgage Settlement
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(Medford, MA) I read an interesting Bloomberg article found HERE last nite. It talked about how with the settlement the banks/lenders will really ramp up their foreclosure activity now that the deal is inked there's no reason to "behave", there's no pending open ended deal hanging over their heads. Now they have clear guidelines they can start to clear the decks. Since it's a 3 year deal it'll be interesting to see how this shakes out. I do find it odd when each state is touting how much $$ they're estimating they'll receive. Calif claims up to $18bil & Florida is claiming up to $7bil, that's $25bil already what about the other 38 other states? Now it's claimed up to $40Bil. I wonder where this $$ will really come from? My guess is it won't be from bankers or stockholders pockets, it'll come in the form of additional fees or more pay for play from the banks involved and systemically, once one bank makes changes the others will follow "the new market trend" and pay off this $$ on the backs of everyone else.
The only conciliation I can find is that the banks/lenders still don't have the staff to handle in a timely manner the foreclosures, short-sales and mortgage modifications. I tweeted 2 stories this week on these issues, you can find them HERE and HERE . The banks/lenders have set the qualification bars so high and made underwriting standards so stringent that it's taking alot of work to qualify buyers, properly appraise properties, address any appraisal issues and get to closing in a timely fashion. Hopefully this will result in employment opportunities for those in need of jobs.
I also see that the settlement has alot of $$ going to the states and federal governments in the form of assistance for underwater borrowers. With the tough economy will these funds be earmarked specifically for this purpose or put into general funds to be used to augment budget shortfalls? How much of the $$ will be eaten up by bureaucratic personnel fees and how much will actually get to the people who need it the most? How much will go to actual principal write downs and how much will just be refinance at a lower monthly bill to these borrowers?
Another issue is money to be paid to those who had their homes improperly foreclosed upon. How will the banks/lenders identify or even find these people? I doubt they keep in touch with holiday cards or record change of address data with foreclosed homeowners. It's said that improperly foreclosed upon homeowners could receive up to $2,200 approximately. Is this really just compensation for what these people went through?
Interesting times and I can see this also being a presidential issue when it gets more exposure, how candidates and party politics will actually define their positions on all the issues involved with this.