Citigroup Puts the Kibosh on Foreclosures
Some 500,000 homeowners with mortgages from Citigroup have a little more emotional insurance today. The fourth largest bank plans to modify $20 billion in mortgages to keep people from having to flee their homes; already they’ve helped prevent about 370,000 people from being foreclosed upon, reports Bloomberg; that’s $35 billion in mortgages. The news comes…
Some 500,000 homeowners with mortgages from Citigroup have a little more emotional insurance today. The fourth largest bank plans to modify $20 billion in mortgages to keep people from having to flee their homes; already they’ve helped prevent about 370,000 people from being foreclosed upon, reports Bloomberg; that’s $35 billion in mortgages. The news comes amid reports that October foreclosures dropped dramatically, and for the second month in a row, to February’s numbers, perhaps thanks to government and corporate shifts in policy and attitude. “Congress has been urging financial-services companies to work with borrowers after foreclosures rose to the highest on record in the third quarter,” they write. “JPMorgan Chase & Co. said Oct. 31 it will stop foreclosure on some loans as it works to make payments easier on $110 billion of problem mortgages, while Bank of America Corp. said it has modified 226,000 loans this year, including those from Countrywide Financial Corp.”
Citi Will Halt Some Foreclosures, Rework Mortgages [Bloomberg]
Citigroup Puts Moratorium on Foreclosures [AP]
Photo by JS300.
As a TIL (Truth In Lending) requirement, all fees including YSP, etc. are disclosed to the borrower in writing. If they weren’t, then you have a case against your lender. If the lender takes out PMI and bundles it into your rate, I don’t see the harm in that. It’s hardly hidden. It’s in your rate!
re: future mortgage rates.
Ridiculous to think that anything other than MBS spreads/pricing will be primary determinant of future conforming mortgage rates (this excludes treasury-based or libor-based Arms that have already), especially the ridiculous idea that secured lending is slowly becoming unsecured ledning and as a result, mortgage rates will rise.
For purposes of refi ing (if you can), I suggest anybody who has an Arm resetting follow religiously the mortgage news daily MBS blog. He provides live color on daily MBs pricing. Also go to HSH mortgage rates sight, click on Ny and see the many brokers/lenders who publish their daily rate sheets (which again reflect recent MBS activity). These sights provide us home owner fools, which we ALL are when you are at the mercy of one of the most opaque industries out there, at least some ammo when talking with lenders. In other words, we ALL have in some way been taken for a ride by our lenders be it with an orgination fee, the quarter point lender mortgage tax built into your point, the point itself, the ysp premium he takes that you have no verifiable way of knowing what it
is, a ridiculously high app fee in some instances, a processing fee, etc…. If don’t think you have been juiced in some way, then you are clueless.
Absent outright fraud, how can anyone credibly claim that they had no idea that the interest rate on their loan, which is called an Adjustable (emphasis) Rate Mortgage? Yes you could argue that it was irresponsible to issue these loans, but its similarly irresponsible to accept them — a real estate folie a deux.
Pmmtenement, that is very interesting. Surprised there are no class-action lawsuits against the banks for not being more precise and forthcoming.
Re people who took out subprime loans with nothing down — there may have been people in the business who thought they could flip houses. They should have known better. But it’s the lax regulation, the subprime brokers, the banks and everyone who colluded with them to make money off the transactions who are to blame. They KNEW they were lending to people who couldn’t pay.
Re the specific cases I know:
*My father, a high-earning engineer with a master’s from Stanford, bought his last house with an ARM (not subprime) knowing it would reset and he would have to sell it before it did. He did sell it as planned and is now living in a rental in Palo Alto, where he has lived since high school.
*A middle-aged, married, Spanish speaking housecleaner with children. They bought a house (in Fremont, I think) with mortgage payments of $2,000 a month, which reset to $4,000. The family of four is now living temporarily with her brother in one room. She said they had NO idea the mortgage would reset, they were purposefully misled. I do not know if they lost a down payment. This is California, no lawyer is required.
*Here in New York, a 50-ish man and his wife, both Spanish speakers, no English at all, bought a two-family about two years ago in Bushwick. His wife needed an operation, he lost his job, and now the house is a short sale, I presume they are living there rent free but am not sure. They also have numerous renters, none of whom speak English and who work in grocery stores. I am not sure what the man does. Something along the lines of working in a grocery store or construction, I imagine. I don’t know what he put down, if anything. These are hardworking, honest people. They are not irresponsible but I doubt they understood what they were getting into.
That reminds me: About a year ago, an arrogant contractor working in Queens and Long Island bragged to me about all the deals he’d done with people who were unqualified to own a house and didn’t understand the transactions. He claimed the real estate agents would fill out the paperwork for the clients, who didn’t speak English. So does that mean the lawyers were in the pocket of the real estate agents and mortgage brokers?
I just hope these people didn’t lose down payments.
There seems to be a lot of searching for blame going on here, which is pointless. Somehow the idea that homeownership was a god-given right became as endemic in American culture as the aesthetic that required every kitchen and bathroom more than three years old to be immediately remodeled in order to increase “value.”
I’d say there’s a reason why sometimes interest rates should go up… the past decade would have played out differently if they had.
“One of my many personality flaws is that I treat everyone who isn’t as smart as I am like an idiot. And I’m exceptionally smart.”
Some unsolicited advice: Learn to value people for qualities beyond mental prowess.
Northsloperenter – Exactly what I was trying to argue but you stated more effectively.
One of my many personality flaws is that I treat everyone who isn’t as smart as I am like an idiot. And I’m exceptionally smart.
“I have little sympathy for those who didn’t suspect that the too-good-to-be-true rate was in fact too good to be true.”
I have little sympathy for financial “professionals” who loaned money to people knowing that they likely didn’t understand it and couldn’t afford it.
But, here we are… bailing out Wall Street and Homeowners after their combined folly inflated then destroyed the credit markets.
It does make one feel more than a little sick, but it doesn’t seem there is much of an alternative, unless economic collapse and massive unemployment somehow sound appealing.