Thursday, July 16
Written 1 p.m. EDT
GET THE DETAILS:
I have an article up today -- "Want
to refinance? Know the details
" -- in which I describe the Home Affordable
Refinance program as confusing. Normally, I strive to believe that people act
in good faith, but they make mistakes. But I'm cynical about the refinance plan.
I think at least one stakeholder wants it to fail. But I don't know which stakeholder
There's a passage of the story in which I describe the plan to allow refinances
of loans with between 105 percent and 125 percent loan to value. "Lenders
could process and close those loans now if they wanted to, but they don't want
to. They'll wait until Fannie and Freddie are buying those loans," I wrote.
But I have an unconfirmed report, from a mortgage broker, that one lender plans
to start taking applications Monday.
FLAT RATES: Mortgage
rates didn't change much this week, at least in Bankrate's weekly survey.
Freddie Mac reports that the 30-year fixed fell 6 basis points last week.
AVERAGE: There are hearings today in the House and in the Senate about
financial regulatory reform. I'm glad I'm not watching them on TV because I'd
be hoarse from screaming at idiots. Y'know, the world would be better off if
it were run by smart, lazy people like me instead of hard-working people of
merely average intelligence. I'm that guy who didn't do a lick of academic work
in high school, yet made mostly A's and a few B's; meanwhile, the people who
studied all night just to make B's and C's are now in charge of everything.
The problem is that when industrious people get hold of a bad idea, they make
sure it's implemented.
Today Elizabeth Duke, a Federal Reserve governor, testified before a subcommittee
of the House Financial Services Committee and asked that the Fed be allowed
to keep its consumer-protection powers instead of having those responsibilities
moved to a new Consumer Financial Protection Agency.
I know what you're thinking: The Fed has consumer protection powers?
Yeah, it does. In her
prepared remarks, Duke says the Fed needs to do a better job for consumers.
Then, in the next paragraph, she says, "We have demonstrated, particularly
in recent years with which I am most familiar, our strong ability to effectively
execute our congressionally assigned consumer protection responsibilities."
Maybe she's auditioning to be Bernie Madoff's publicist.
Also today, an official with the Treasury Department submitted written
testimony to the Senate Banking Committee about the Obama administration's
failing Home Affordable Modification program. Herbert Allison, assistant secretary
for financial stability, brags that the administration's foreclosure-prevention
efforts are at a scale that "has never been previously attempted."
Well, I could attempt to bench press a million pounds, but I would fail, and
I wouldn't expect the Senate to give me a pat on the head for trying.
What bugs me most about Allison's testimony is that he never mentions principal
reduction, unless I missed something in his turgid prose. Instead, he seems
to think it's a great idea to "help" underwater borrowers by extending
their loan terms to 40 years.
Meanwhile, an executive who represents mortgage investors told the Senate committee
that more homeowners should get principal reduction, according to a
report by Bloomberg.com's Jody Shenn.
Curtis Glovier, speaking on behalf of the Mortgage Investors Coalition, told
the Senate that more borrowers should get to take advantage of the Hope for
Homeowners program, in which borrowers have some debt forgiven when they refinance
into government-insured mortgages.
Under Hope for Homeowners, holders of home equity loans and home equity lines
of credit would be paid off with pennies on the dollar. Glovier told the Senate
that TARP money should be paid to those second lienholders so they'll let the
refis go through.
Hey, finally -- someone who speaks sense.