Wednesday, March 26, 2008
John Taylor told Bloomberg TV today that efforts to ensure liquidity in the market won’t be effective without concurrent interventions to assist homeowners to avoid foreclosure. At least $280 billion has been provided in short term liquidity for banks, but little assistance has been offered to homeowners. Efforts to ensure liquidity in the market won’t be effective without shoring up the deteriorating housing assets that caused the liquidity problem in the first place. From NCRC’s press release today:
Washington, DC – Recent interventions to provide hundreds of billions of dollars in liquidity to the market will not dampen the growing housing crisis. Hundreds of billions of dollars in short term liquidity has been made available, but almost no effort has been taken to shore up deteriorating housing assets and prevent millions of Americans from losing their homes.
Enhancing liquidity is important. But the current liquidity problem stemmed from deteriorating housing assets. “It’s like trying to put out a fire by spraying water on the building next door,” said John Taylor, NCRC’s President & CEO.
Read the full press release here.
Friday, March 14, 2008
In Plenary 2, and later on during the NCRC conference on March 14, 2008, details of the NCRC plan to end the foreclosure crisis were outlined and discussed. A full press release on this is available on the NCRC website and also available from Jesse Van Tol at jvantol@ncrc.org.
Under the NCRC plan, the government will buy the loans in auction at deep discounts. This will already reduce the value of the mortgage. And if the new reduced mortgage is still greater than the market value of the home, then the government will hold a “soft-second” loan on that difference, maintaining a lien worth that value on the property. The government will get back the value of the lien when the property is sold or refinanced.This plan provides a solution that is sustainable in the long term and it tackles the problem at a large scale–which is the need of the hour.
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Friday, March 14, 2008
Today at the NCRC 2008 National Conference, Fed Chair Ben Bernanke outlined the rules proposed by the Federal Reserve Board under its HOEPA authority in December. These rules are aimed at cleaning up the home mortgage markets, and are aimed at preventing future or continuing abuses in mortgage lending. These rules ban unfair or deceptive practices and apply to the entire mortgage industry–not just to institutions directly regulated by the Board. The public comment period for these proposed regulations ends on April 8, 2008. The rules that the Fed Chair outlined at the conference in his keynote address are: Read the rest of this entry »
Friday, March 14, 2008
In Plenary 1, Kathleen Engel, Professor of Law at Cleveland State University, summed up the genesis of the subprime mortgage crisis with the quote: “A rolling loan gathers no loss.”
As entities in the mortgage market–from loan originators, brokers, security packagers, banks, to secondary market buyers and investors–quickly passed on their loans to the next entity. Each entity gathered good profits along the way. Since loans were quickly passed on to the next entity, each entity did not find it worthwhile to conduct due diligence on the loans. And now we have a full blown crisis in the financial system.
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Friday, March 14, 2008
Good Morning!
This is your guest blogger at the NCRC conference reporting on March 14th at the Special Session titled “Foreclosing on the American Dream: Recreating Affordable Homeownership.”
It has been a dynamic two morning sessions:
First, Sheila Bair, Chairman of FDIC spoke about the foreclosure crisis, current programs to stem the crisis, and what more needs to be done.
She reiterated a fundamental point that consumer protection and sound banking are two sides of the same coin. We cannot have a successful economic system or financial system without one of these components.
In my opinion, the most important thing Sheila Bair said this morning was: “If people are still losing their homes because their rates have been reset higher, then I want to know about it.” She feels this should not be happening after the government’s guidelines to freeze mortgage rates at their starter levels for five years.
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