My Way News - Obama plan seeks to save millions from foreclosure: "The ambitious plan he was announcing at a Phoenix high school Wednesday was expected to offer government cash to mortgage companies that reduce interest rates - and therefore monthly payments - for homeowners in danger of default, according to several people briefed on the plan. What remained unclear was how the government will decide who qualifies for relief.
One Democratic official familiar with the plan said it also would allow homeowners to refinance their mortgages if they owed more than their homes were valued. Still another section would give bankruptcy judges more authority to change mortgages. That last provision has been opposed by lenders, who said it would add risk and lead to higher interest rates.
The official, who spoke on the condition of anonymity to avoid pre-empting the president, said the Obama administration also would use Fannie Mae (FNM) and Freddie Mac (FRE) to help prevent borrowers from defaulting on their mortgages, and create national standards for loan modifications."
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OK--but that business about letting judges change mortgages is a terrible idea. How can you expect banks to be more willing to make loans if judges can change the terms of those loans so they don't get paid as much as they calculated up front? This is one of the issues that led to scrapping the Articles of Confederation and adopting the US Constitution. State legislatures and judges were tampering with the terms of loans to help debtors. The role of the national government is supposed to be neutral. If it becomes the friend of the debtor class, we are in for a financial miasma like we have never seen.
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