Citigroup, JPMorgan Chase and Morgan Stanley said they had placed a moratorium on foreclosing on some home loans to give the government time to launch a $50 billion mortgage relief program.Chomping At The Bit
The moratorium announcements come days after major bank chief executives committed to pausing mortgage foreclosures at a Congressional hearing.
As reported Thursday, Obama officials are working on a plan to spend $50 billion on foreclosure prevention and establish national standards for modifying home loans. The program would include possible government subsidies for homeowners who qualify.
Treasury Secretary Timothy Geithner Tuesday announced a plan to stabilize the financial system. One element of the plan is $50 billion of assistance to "prevent avoidable foreclosures" of middle-class homes occupied by their owners, according to a document Geithner released.
The Obama plan under consideration would seek to help homeowners before they fall into arrears on their loans. Current programs only assist borrowers that are already delinquent.
Under the evolving plan, homes would undergo a standardized reappraisal and homeowners would face a uniform eligibility test, sources said.
In an interview, James Lockhart, the regulator that oversees government-controlled mortgage finance companies Fannie Mae and Freddie Mac, told Reuters the industry was eager to have a standardized loan modification standard.
"I've talked to all the major servicers�both the big bank ones and the big independent ones�and they are all ready to go, they're chomping at the bit,'' Lockhart, the director of the Federal Housing Finance Agency, said. "The other thing they're asking for standardization.''
Of course the banks are "chomping at the bit". Banks are more than happy to halt foreclosures because the plan will allow them to dump $50 billion in troubled loans straight off their balance sheet right on to the balance sheet of taxpayers.
I suspect that $50 billion will soon become $250 billion. This plan is not about foreclosure prevention. It is a fraudulent scheme to dump toxic waste on unsuspecting taxpayer bagholders.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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