Too_Many_Tools wrote:
I say "Yes".

And let those who squandered their depositor's money take the
haircut...they were the ones who profitted from poor lending
practices.

Your thoughts?



Me also.


TMT


Fight building over judges redoing mortgages
By LARRY MARGASAK, Associated Press Writer Larry Margasak, Associated
Press Writer 4 mins ago
WASHINGTON – Most congressional Democrats say the quickest way to save
homeowners like Troy Butler of Saginaw, Mich., is to let them declare
bankruptcy and allow judges to dictate new mortgage terms.

Easy, except the lenders that would absorb the pain — and lose control
of any deals to ease the terms — do not want to get dragged into
bankruptcy court by millions of overextended borrowers.

Tough nuts. Safer lending practices would have avoided much of the
current mess.




Butler, 40, is a laid-off General Motors worker who has filed for
bankruptcy. But the bankruptcy court has no authority to change the
terms of his $90,000-plus mortgage that is more than double the value
of his home.

A bill to give judges authority to alter loan terms for primary
residences may be the quickest way to arrest the housing market's
collapse. Most Democrats in the House and Senate support that plan.
President Barack Obama told Democratic leaders Friday he also backs
it, according to a Senate aide who was not authorized to be quoted by
name.

But 10 groups representing the lending industry and other businesses
are fighting back fiercely. Several have engaged portions of their
lobbying machines to stop the legislation. The groups spent $83
million in lobbying on multiple issues in 2008, a figure that shows
the power of the banking and investing industry and their business
supporters.

One Democratic backer of the bankruptcy proposal, Rep. Maxine Waters
of California, said the banking industry "has owned this Congress far
too long."

I agree.



Butler, the GM worker, and an industry lobbyist see things much
differently.

"I'm living from day to day, hoping to make it through the day. I
worry about my family, where we're going to live, how we'll survive,"
said, Butler, who has a disabled wife and two children, ages 15 and
11.

The chief lobbyist for the Mortgage Bankers Association, Steve
O'Connor, said new homebuyers would end up paying higher interest and
bigger down payments if lenders are saddled with the risk that a judge
could change mortgage terms.


Only temporarily, until the lending institutions find a safe balance of
profitability and lending practices. I would say that would be about 5
to 10 percent down,(depending on debt to income ratio) interest of about
6 to 7 percent, fixed rate mortgages only, lower closing costs, (c'mon 3
to 4 percent of home value? How's about a flat fee of about 4 to 6 hours
labor, that's what my friend in the biz says it takes on the average, of
which most is done by assistants.), and automatic bi-annual reviews and
refinancing (at a low closing cost, see above) if the homeowners' loan
interest rates drop more than say, 1 and 1/2 percent.






"We're going to defend the industry" against "bad public policy,"
O'Connor said.

The association's 23-member government affairs team is trying to
persuade lawmakers to kill the bankruptcy legislation. The team
includes six lobbyists and nine policy experts who double as
lobbyists, said O'Connor, senior vice president of government affairs.

The bankruptcy solution would not cost taxpayers money, as would
mortgage modification programs that could become part of the
government's huge economic bailout package. But it certainly would
harm the bottom line for lenders and investors holding mortgages.

Tough. Learn better business practices.



The lending industry has voluntary programs in place to change
mortgage terms. But Butler's lawyer, Peter Bagley, said it was a
nightmare trying to contact his client's lender.

Easy to fix. Enact a law that says you can't lend in a state, unless you
have manned offices in that state.





First, he was told the application for a loan modification would take
at least 30 days to process. Bagley then called someone with authority
to stop any sale of the home, but only received voice messages that
the mailbox was full. The application never arrived.


See above.


SNIP


--
Steve Walker
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