Hamilton, Madison, and Jay

This blog is devoted to a variety of topics including politics, current events, legal issues, and we even take the time to have some occasional fun. After all, blogging is about having a little fun, right?

Location: Mesa, Arizona, United States

Who are we? We're a married couple who has a passion for politics and current events. That's what this site is about. If you read us, you know what we stand for.

Monday, December 8, 2008

We're shocked -- SHOCKED -- to hear of people re-defaulting on mortgages!

A bit of tongue in cheek humor there for you. We're not really shocked, to be honest, but some people might be. Yes it's being reported that many mortgage holders have re-defaulted on their modified mortgage:

HT to DrewM. at AoSHQ

Recent data suggests that many borrowers who received help with mortgage modifications earlier this year tended to re-default on their payments, a top U.S. banking regulator said on Monday.

"The results, I confess, were somewhat surprising, and not in a good way," said John Dugan, head of the U.S. Office of the Comptroller of the Currency, in prepared remarks for a U.S. housing forum.

"Put simply, it shows that over half of mortgage modifications seemed not to be working after six months." Dugan said based on data collected from some of the biggest U.S. institutions, like Bank of America [BAC 17.09 1.85 (+12.14%) ], Citibank [C 8.17 0.46 (+5.97%) ] and JPMorgan Chase [JPM 35.46 2.11 (+6.33%) ], home foreclosure starts fell by 2.6 percent in the three months ended in September.

However, data which is to be issued by the OCC and the Office of Thrift Supervision (OTS) next week could throw cold water on a push by some U.S. policymakers for loan modifications as the key remedy for the ailing U.S. financial and economic crisis.

Dugan said recent data showed that after three months, nearly 36 percent of borrowers who received restructured mortgages in the first quarter re-defaulted.

The rate of re-default jumped to about 53 percent after six months and 58 percent after eight months, Dugan said, without providing an explanation for the trend.

Regulators speaking at an OTS -housing forum did not provide any explanations for the causes behind the data.

No explanations? Um, how about the fact that these people were given home loans for homes they couldn't afford? Anyone think of that? How about the modified mortgages still are no help because they still can't afford it?

So what will be suggested to the Congress this time? Are they going to decide we have to bailout these people too? Free homes for everyone? Puh-leeze.

Renegotiating the mortgages is the first step to digging ourselves out of this fiasco; a fiasco caused by those in Congress (ahem, Democrats) who didn't conduct the proper oversight of Freddie and Fannie, and continued to apply pressure to banks to relax their lending practices for people who couldn't afford to get into a home. That's who's at fault in this mess, Congress.

If you can't afford to move into a home, then you shouldn't be moving into one. At least, you shouldn't be buying one. You can rent a home if your family is too large to live in an apartment, a townhouse, or a condo. You don't need to buy one, which puts you in a financial bind. And if that occurs, you shouldn't be looking to others to get you out of the bind you willingly put yourself into.

The banks should work with their mortgage holders to keep them in their homes, but those that are having serious difficulty shouldn't be given a "free pass" as these re-defaulters seemed to have done. We can't afford anymore bailouts even though it looks like the Big 3 automakers will be getting one. The more we do in the lines of bailouts, the weaker our economy is going to get. Why? Who picks up the tab for all these bleeding heart bailouts? We do. But Larry Kudlow is right. If Congress, the current president, and the incoming president want to end this debacle, the first step is across-the-board tax cuts. That'll help right the listing economy, and it will give companies an influx of capital they'd otherwise be sending to the bottomless rathole otherwise known as the US Congress.

Publius II


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