The nation’s biggest mortgage lenders are rallying around President Barack Obama’s borrower rescue plan. The plan is so popular that HUD’s Web site is struggling to handle all of the user traffic.
The U.S. Treasury unveiled today details about the Homeowner Affordability and Stability Plan. The plan includes a $75 billion government subsidized modification program and a streamlined refinance program for government sponsored enterprise loans that are above 80 percent loan-to-value.
The plan, originally announced last month, has prompted so much traffic to the U.S. Department of Housing and Urban Development’s Web site that it has been unavailable much of today.
Wells Fargo Home Mortgage, which ranked as the biggest residential lender in the country last year, said in an announcement that it fully supports and will quickly implement the plan.
“We believe the administration’s plan is thoughtful and comprehensive, and it addresses the current challenges our nation faces,” Wells Fargo Home Mortgage Co-President Mike Heid said in the statement. “We also support the legislative changes required to extend this program to FHA and VA loans.”
Last year’s No. 2 residential lender, JPMorgan Chase & Co., said in a press release that it “strongly supports” the mortgage modification program. JPMorgan said standards are clear, fair and consistent. It commended the $729,750 limit and owner-occupancy requirement in the modification program because the “right borrowers” are targeted.
“The plan appropriately balances the interest of homeowners, mortgage servicers and investors,” JPMorgan Chief Executive Officer Jamie Dimon stated in the release. “The thoughtful and rapid roll-out of various programs is the only intelligent way to begin to solve these problems. These mortgage modifications are economically and morally the right thing to do for individual customers.”
Dimon added, “There is no silver bullet.”
Bank of America Corp., which is knee-deep in loans to struggling borrowers following its July 2008 acquisition of Countrywide Financial Corp., issued a statement indicating it would extend its foreclosure moratorium on eligible borrowers while it implements the modification plan. BoA was the third biggest U.S. residential lender last year and could easily steal the top spot from Wells this year.
“We appreciate that the Obama Administration and the U.S. Treasury have been working closely with leading mortgage servicers, mortgage insurers, industry representatives, consumer groups and other interested parties to develop the guidelines released today,” Bank of America Mortgage President Barbara Desoer said in the statement.
A joint statement from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said, “By providing servicers and holders of eligible residential mortgages with incentives to modify loans at risk of foreclosure, the program will promote sustainable alternatives to foreclosures on owner-occupied residential properties.”
Even the Mortgage Bankers Association, which has been strongly opposed to the administration’s efforts to enable cramdowns by bankruptcy judges, had a supportive statement to offer. The trade group was pleased with a national limit of $729,750, rather than just in high-cost markets.
“We think this program will undoubtedly help servicers keep more at-risk borrowers in their homes,” MBA President and CEO John A. Courson said in an announcement.
But MBA recommended that the 105 percent limit on the streamlined conforming refinance program be raised. It also called for safe harbor for servicers.
Citigroup Inc. said in a news release that the plan will prevent foreclosures — though it is hard to imagine the struggling giant criticizing its biggest shareholder.
And supportive comments from Fannie Mae President and CEO Herb Allison and Freddie Mac Chairman John Koskinen would only be expected while the two government sponsored enterprises are under the control of the Obama Administration.
Related:
High LTV Streamlined Refis Without M.I.
A second piece of the Obama administration’s mortgage rescue plan involves refinancing borrowers with high loan-to-values and as-agreed payment histories. The program enables streamlined underwriting and the ability to skip mortgage insurance and appraisals on some loans.
| Details of Massive Modification Plan Emerge The Obama administration today released more details on its $75 billion loan modification program. |
