I received an interesting question one hour after appearing The Early Show this morning from Linda, which demands a separate blog post. Here is the segment with Jeff Glor and the question follows:
I just watched your piece on The Early Show (3/30) and my question is:
What is the new government program doing for those whose mortgages are with Deutsche National Bank, which is out of the country and refuses to work with you AT ALL? After hundreds of phone calls to their "United States office in New York", my son gets the same answer ...whoever your "lender" is has been given the power of attorney to handle your mortgage. The lender reverses to an automatic "We cannot help you".
Maybe the government should LOOK at the packaged loans they have sold EN MASS to outside countries who are not concerned about American mortgages. They couldn't even produce the note to his mortgage. I did an extensive search on Deutsche and they have no reason to work with any of their customers because their holdings reach FAR beyond the United States. Very lucrative.
What a vicious circle the American people have to endure because of our newly elected Administration, but rest assured we realize the REAL equation...NO JOB=NO MONEY=LOW CREDIT SCORE BEGINNING=NO HELP ON YOUR MORTGAGE!
My comment to you is this...those of us who are paying our mortgages on time every month are part of this mess. You brushed through it brutely by merely mentioning, "It's nice that there are those who pay their mortgage on time, but..."
We ARE part of this mess because WE are carrying the load for the rest of those who cannot! My husband and I, thankfully, have jobs, but because of the NEW economy we live in, that could change with the stroke of a pen.
Then, where would WE be....Right in the "help me with my mortgage" pool.
Be kind.
There are a few parts to Linda's question, but let's start with the problem of dealing with banks. The new plan isn't compulsory, which means that Deutsche Bank doesn't have to change the terms of the loan with Linda's son. That said, the new program puts a fair amount of pressure on banks-and offers financial incentives as well-to get them to reduce principal amounts and hopefully avoid foreclosure. I would wait a few weeks until the plan gets up and running before trying again, but keep trying!
Linda also mentions the issue of what happens when banks don't hold the loans that they underwrite. Clearly the packaging, or securitization, of loans contributed to the problems that we are facing today. If a bank truly thought it had to hold each mortgage that it extended to a homeowner, the underwriters likely wouldn't have provided credit to as many people during the housing boom. Additionally, the fact that so many players are involved with the loan once it is packaged and sold makes modifications difficult.
Yet here we are-all of us forced to clean up the remnants of the bust together. I certainly didn't mean to gloss over the fact there are plenty of responsible folks who are paying the price for the crisis (darned that TV-we were running out of time, that's why I went fast at the end!), but I guess I'm realist-we need to prevent millions of foreclosures precisely to protect those responsible homeowners.
Think of this situation as if it were a fire that was taking place three doors away from your house. The initial spark may have occurred because your neighbor had a crazy party where someone threw a lit cigarette in the bushes. Nobody noticed and ultimately flames engulfed the house. The neighbors all pitched in to contain the fire, because in the moment, it was more important to put out the fire before it spread to other homes. Once the fire is out, the neighborhood can discuss fire prevention and safety measures.
US taxpayers have all paid dearly for this financial fire, but that's what we do-we pitch in and help out, even when it's not fair-and Linda, the clean-up process has not been fair. That said, my bigger concern today is that our prevention plan-financial regulatory reform-won't be sufficient to stop the next fire.
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