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Romney says banking reform hurting housing market in Florida

May 21, 2012 By Leave a Comment

Adam C. Smith, Tampa Bay times

Mitt RomneyMore than four in 10 Florida homeowners are underwater on their mortgages. President Barack Obamahas not done much to help them, and it doesn’t sound like Mitt Romney has any serious plan in store either. His main idea? Repeal Wall Street reform.

“Bankers have been very slow in renegotiating the mortgages, helping people go through the process, short sales and so forth that allow these products, these homes, to be taken out of the market so they can be bought by new investors,” Romney said in a Political Connections interview airing today on Bay News 9.

“Government has made it harder for the banks to do it. The Dodd-Frank (Wall Street) legislation has scared particularly community banks in such a way that they’re just paralyzed. They’re not taking action to help people get their mortgages renegotiated and let people either stay in their home or have the home ultimately go back in the hands of new investors that will turn it around and ultimately bring home values back up.”

Check out the full interview at 11 a.m. and 8 p.m. on Bay News 9.

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Jamie Dimon Admits JPM Made Too Many Mistakes In Housing

April 5, 2012 By Leave a Comment

JPMorgan CEO on housing: We made too many mistakes

Justin T. Hilley

jamie dimonIn a letter to shareholders JPMorgan Chief Executive Jamie Dimon admits that his bank contributed to the collapse of the American housing industry, but says that progress is being made to rectify the errors.

“We were one of the better actors in this situation — but not good enough,” Dimon says. “We made too many mistakes.”

Dimon tells shareholders that his bank participated in the disaster by originating mortgages that wouldn’t have been given a decade earlier (“and won’t be given a decade later”). When delinquencies and foreclosures grew dramatically, his bank was “ill-prepared operationally to deal with the extraordinary volume of troubled mortgages and upset borrowers.”

“Our servicing operations left a lot to be desired,” he adds. “There were too many paperwork errors, including affidavits that were improperly signed because the signers did not have personal knowledge about what was in the affidavits but, instead, relied on the company’s processes. However, the information in the affidavits was largely accurate – i.e., the borrower, in fact, was in default, we did have the mortgage and so on.”

Gearing up to deal with its problems meant overcoming the poor systems JPMorgan inherited in acquiring Bear Stearns andWashington Mutual. In addition, there
 were numerous government modification and refinancing programs and multiple changes to these programs to contend with, Dimon says, some of which involved extensive and hard-to-complete paperwork.

Dimon also points out that early on in the crisis, JPMorgan stopped dealing with mortgage brokers, some of whom, he claims, “underwrote the worst of the mortgages and probably mis-sold mortgages more than most.”

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Fannie & Freddie To Underwater Homeowners: Drown Bitches!

February 13, 2012 By Leave a Comment

Fannie & Freddie Resist Demand For Principal Reductions

Bonnie Kavoussi and Ben Hallman, Huffington Post

Top law enforcement officials in several states are signaling they will pressure Fannie Mae and Freddie Mac to correct what is widely seen as one of the biggest deficiencies of the $25 billion mortgage settlement announced on Thursday: It simply doesn’t help that many homeowners.

Borrowers whose loans are backed by the government-controlled mortgage giants — nearly half of all outstanding mortgages in the United States — are not eligible for payouts under the deal. State officials who negotiated the deal say they could not convince Fannie Mae and Freddie Mac, or the Federal Housing Finance Agency, which oversees the loan giants, to join onto the settlement because they are steadfastly opposed to principal reductions — loan write-downs for borrowers whose homes are at risk of foreclosure.

“This is a glaring weakness of the overall settlement,” said one state official who spoke on condition of anonymity. “Fannie and Freddie were absolutely opposed to principal reduction. You’d ask why, and they’d say ‘moral hazard to the taxpayer.’”

So far, the mortgage giants and the FHFA have only said that they’re avoiding principal reduction because of the cost to taxpayers.

Principal reductions are hailed by many economists and housing experts as the most effective way to help homeowners who are underwater on their mortgages, owing more than the home is worth. About 1 in 5 homes in the U.S. are currently underwater.

The attorneys general of New York, California and Massachusetts have all said in recent days that they are disappointed that Fannie Mae and Freddie Mac were not part of the settlement, and that they plan to continue pressuring the mortgage giants to write-down loans.

New York Attorney General Eric Schneiderman, whom President Obama tapped in January to head a task force that will investigate financial fraud leading up to the market crash of 2008, likely has the most leverage. Schniederman has said the new unit will investigate wrongdoing in the packaging and guaranteeing of home loans. He is already working with the FHFA’s inspector general as part of this probe, which is expected to include serious scrutiny of Fannie Mae and Freddie Mac’s behavior.

The task force also includes Robert Khuzami, the enforcement chief at the Securities and Exchange Commission. In December the SEC sued six former Fannie Mae and Freddie Mac executives for misleading the public about the mortgage giants’ exposure to risky subprime mortgages as the housing bubble deflated.

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Mortgage Rule Could Exacerbate Housing Slump

February 7, 2011 By Leave a Comment

Corbett B. Daly, Reuters via Huffington Post

U.S. regulators are gearing up for a landmark decision that could be pivotal in the recovery of the housing market — how much risk can mortgage lenders sell to investors without having to hold on to some of it themselves?

The new standard will determine what loans are deemed safe enough for lenders to sell without holding 5 percent of the value on their own books.

How officials choose to define these new ultra-safe loans — dubbed qualifying residential mortgages — will have implications for who can get a mortgage, the price they will pay and how quickly the struggling housing market revives.

“We are playing with dynamite here,” said Tim Rood, a partner at The Collingwood Group, a housing consultancy in Washington. “If the borrower is paying more, the borrower can’t afford as much house” and home prices would fall, he said.

This 5 percent “risk retention” rule was mandated by last year’s rewrite of Wall Street rules to try to improve mortgage underwriting by making lenders bear more of the cost of loans that go bad.

Poor underwriting led to the mountain of bad debt that touched off the financial crisis and led the nation into its deepest recession since the Great Depression.

Federal Deposit Insurance Corp Chairman Sheila Bair wants to require 20 percent down payments to thwart the excesses that fueled the financial crisis. Industry heavyweight Wells Fargo has proposed an even tougher standard: 30 percent.

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