Government guarantee preserves 30-year mortgage

Look closely & see a weird COMMUNISM. Democrat or Republican, sell outs to the Banks are just plain sell outs. (by Joe Vera)

Lawmakers: Government guarantee preserves 30-year mortgage
by JACOB GAFFNEY

Tuesday, June 21st, 2011, 5:39 pm

The prevalence of the 30-year mortgage in the housing market will rapidly diminish and eventually disappear without a government guarantee for related mortgage-backed securities.
Two members of the House Financial Services Committee, Reps. Gary Peters (D-Mich.) and John Campbell (R-Calif.) told attendees at the American Securitization Forum’s annual meeting in Washington that this is precisely what will happen if legislation they plan to introduce is not passed into law.
“How many of you are going to be excited to buy a package of 30-year, mortgage-backed securities in the TBA market that’s not government guaranteed?” Campbell asked the crowd of secondary market issuers and investors. “Let the record show, the hands showing up are zero.”
Campbell said the insurance program will be on bonds and not on institutions. It’s an idea that holds bipartisan support and is supported by the Federal Insurance Deposit Corp., as well, he added.
“Thirty-year mortgages will need to be securitized. The FDIC will not allow banks to hold them. And the banks want to do it privately,” Campbell said. “We don’t like to call it a GSE bill, because we aren’t going to have GSEs. If we are going to have housing recover, we need housing finance to recover.”
In May, Campbell told HousingWire the proposed bill had already garnered support from around the industry.
Campbell and Peters are pushing to create guarantee associations. These will be private entities, which hold 5% risk retention on mortgage bonds, and regulated by FHFA.
“We are not doing (Fannie and Freddie) all over again. Fannie Mae and Freddie Mac are guaranteed entities. This will guarantee the performance of the loans, not the entities itself,” he said.
Campbell said the legislation will create five such associations, at least as a start. In the future, he hopes these associations will increase in number and specialize in different operations. This way an entity can fail, but the mortgage markets will be diverse enough to absorb the blow.
“Americans don’t want hedging strategies based on changing mortgage rates,” added Peters. “They want 30-year, fixed-rate mortgages with no surprises.”
During the question and answer portion of the panel, one observer wondered why the GSEs shouldn’t become the first two such guarantee firms. It would be easier, he posited, to wind down GSE issuance and transform the firms into insurers. This would save an enormous amount of taxpayer money, he said.
Campbell countered that Fannie and Freddie are now too political for such a solution.
Peters quickly added: “The system of private gains and socialized loss is a moral hazard and needs to end.”

Michigan County approves Funding to Help Homeowners fight MERS, DocX cases

Michigan county approves funding to help homeowners fight MERS, DocX cases
by JON PRIOR
Wednesday, June 8th, 2011, 5:42 pm

A committee for the Ingham County Board of Commissioners in Michigan approved up to $60,000 in Legal Aid funding to represent borrowers affected by allegedly improper foreclosures and possible documentation fraud.
The full board is scheduled to approve the resolution June 14.
The county’s Register of Deeds Curtis Hertel Jr. uncovered potential fraudulent documents in his office calling into question hundreds of foreclosures. Hertel told HousingWire Wednesday he found 400 cases with possible fraudulent documentation involving Mortgage Electronic Registration Systems and another 100 involving DocX, a division of Lender Processing Services (LPS: 24.54 +0.41%).
According to the resolution adopted by Ingham County, the alleged wrongful foreclosures by MERS resulted in more than 400 people losing their homes over the last two years.
The legal assistance provided to affected homeowners will be made available between July 1, 2011, and June 30, 2012.
Both MERS and LPS signed consent orders with federal regulators in April as a result of a robo-signing scandal that engulfed multiple mortgage industry firms. Regulators required the two companies to “address significant weaknesses in, among other things, oversight, management supervision and corporate governance.”
MERS declined to comment on the Michigan subsidies. LPS did not immediately reply to requests for comment.
The Michigan Attorney General launched his own investigation into legacy DocX affidavits after Bill Bullard, the Register of Deeds in Oakland County uncovered questionable signatures and improper documentation as well.
The Michigan Court of Appeals required MERS in April to pursue foreclosures through the courts, even when the state normally uses a nonjudicial process.
Consumer advocates lobbied Washington for a federal funding program to help homeowners in these cases. Thad Bartholow, a foreclosure defense attorney for Armstrong Kellett Bartholow in Dallas, said such a program sounds like a good idea but could cause more harm in the long run.
“In particular, I would have concerns about creating a parallel to the already horrible problem with ‘foreclosure rescue’ scams by incentivizing shoddy or unscrupulous attorneys with little experience in this highly technical area of the law to take these cases, perhaps even on a volume basis, and absorbing the settlement funds without adequately serving their clients,” Bartholow said.
Hertel said other patterns cropped up in his investigation, which the courts are looking into. Bartholow said the issues arising out of these and federal probes seems unending in scope.
“Calling the problem of robosigning ‘epidemic” is a gross understatement,” Bartholow said. “Virtually industry-wide, it was the norm, with very few exceptions.”