Oct

31

Mortgage Bankers Association Favors Government Bailout

Filed Under FHA, Mortgage Bankers Association, Mortgage News 
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If bankruptcy judges begin to reduce or “cram down” the principal amount of residential mortgages, Federal Housing Administration servicers would have to absorb the losses because the government cannot pay a claim on a cramdown, according to the Mortgage Bankers Association.

Passage of the bankruptcy bill (H.R. 3609) to permits cramdowns and loan modifications would make it riskier for lenders to originate FHA insured and Department of Veterans Affairs guaranteed loans, MBA chairman-elect David Kittle warned a House Judiciary Committee panel.

As a result, lenders would have to charge higher interest rates and fees. The MBA also noted that Fannie Mae and Freddie Mac would be required to purchase loans out of mortgage-backed securities pools if loans are modified.

“If this bill becomes law, we believe mortgage rates would jump significantly, going up 1 1/2 to 2 points for everyone taking out a loan,” Mr. Kittle told the commercial and administration law subcommittee.

The government is suppose to foot this???…that REALLY means you and I!

Just a thought, maybe the banks should absorb the costs, after all, the DID underwrite the mortgages.

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