Just when you thought that Congress was the only legislative body screwing things up, there’s news that New Jersey legislators are moving forward on a new bill to “encourage” lenders to avoid foreclosure. The New Jersey Home Ownership Preservation Act would tax lenders $2,000 for every foreclosure.
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Suze Orman and Ali Velshi (CNN financial reporter) appeared on Oprah this week to explain what caused the foreclosure crisis, and how individuals can best respond to the financial meltdown. While I agree with Ms. Orman’s suggestions (if not the order of those suggestions), her explanation of the cause of the foreclosure crisis was overly simplistic and conveniently omitted ….
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California Governor Arnold Schwarzenegger signed 10 bills designed to prevent foreclosure by reining in the mortgage industry. The one bill that he did veto was designed to create a “fiduciary duty” for mortgage brokers to borrowers.
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Warren Buffett and Bill Gross of PIMCO commented earlier this week that the proposed government bailout program could actually turn a profit. However, Mr. Buffett qualified that comment by saying that was contingent upon them buying these loans at the right price.
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As I mentioned in my previous post on the proposed RTC plan to avoid foreclosure crisis, there is already a long list of players who want to buy distressed mortgage assets. So I wondered whether the federal government would end up paying more for these assets than the well-capitalized “vulture” funds.
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The latest thinking on what to do with all the bad paper resulting from the foreclosure crisis is to create a new version of the RTC. This entity would buy the under-performing loans from current investors. Democrats want to ensure that this new entity will be more flexible in dealing with homeowners who want to avoid foreclosure.
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One thing that I’ve noticed about homeowners who are trying to avoid foreclosure is that they commonly have a long denial phase. And the deeper they get into the foreclosure process, the more likely they are to slip back into that denial. They often make very poor decisions along the way, all in the name of maintaining the (previous) status quo, and trying to avoid foreclosure.
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The American Housing Rescue and Foreclosure Prevention Act is already showing its flaws, and it hasn’t even been enacted yet. In a move that shows just how inept, incompetent and inefficient our federal government is, THA raised the premium that it charges all borrowers, effective October 1st.
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New York’s Governor Paterson just signed into law a bill that extends the foreclosure timeline on subprime mortgages. This law was intended to provide foreclosure relief to struggling homeowners, giving them more time to obtain a loan workout.
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Who can get foreclosure assistance from this bill and how soon? With all the excitement over the foreclosure relief bill, most of the press coverage has been light on analysis, particularly when it comes to forecasting how this bill will play out in “real life.”
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