Let’s bail people out from their bad decisions!
You’ve heard of predatory loans? Yeah, all those millions who took out mortgages they could not afford, they were forced to do it at the point of a gun. If not, those loans are not predatory.
The Obama administration is itching to require the biggest mortgage lenders to write down principle on tens of thousands of underwater mortgages to try to reduce foreclosures.
What unilaterally revoking of contracts will do to lenders’ future willingness to lend is no concern of the left.
Reuters reports: American Home Mortgage Servicing, one of the largest subprime mortgage servicers, is urging the U.S. Treasury to organize a plan to boost principal reductions for up to 1 million homeowners by unlocking loans from securities.
The servicer is asking for amendments to contracts that govern treatment of delinquent loans in mortgage securities. Currently, most contracts don’t allow sales of loans prior to foreclosure, and in many cases don’t permit a servicer to lower principal when a loan is modified.
American Home’s plan formalizes an idea it first floated within the industry more than two years ago. It hopes to draw more attention now as the government’s efforts to ease payments with loan modifications have had limited impact, foreclosures are still high and home prices have resumed falling.