Residential Mortgage Foreclosure Mediations May not Include Principal Reduction Option ...

...After All.  This is an update to previous posts here regarding Residential Mortgage Foreclosure Mediations, most recently on March 25, 2010 and  March 26, 2010.

   Not long ago, perhaps a matter of three weeks at the most, Bank representatives were quoted as speaking with the authority of their Banks, that the Banks are now willing to consider reducing the principal on residential mortgages that are in Foreclosure.

   Not so now, say two testifying representatives of the Banks, one from JP Morgan Chase and one from Wells Fargo.  They told the House Financial Services Committee, under oath, that their Banks will not consider reducing principal after all.  Their "investors" will not let them, for one thing.  It would not be good for the country, for another thing.  See David Streitfeld, "Banks Resist Plans to Cut Mortgages" p. B1, col. 6 (New York Times Nat'l ed., "Business Day" Section, Wednesday, April 14, 2010).

   Please.  If the Banks will not reduce the amount due on their mortgage loans once they have the borrowers' signatures, that is their choice.  But spare us the lectures about morality, something about which the Big Banks clearly know so little.

   In the interim, will Mortgage Insurance Policies be called upon to satisfy the Banks which hold unpaid and perhaps never-to-be-paid Mortgages?

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Comments

[curmudgeonman]

It is not easy to rig a market bubble and then rig the derivatives market to hide the dubious value of the underlying mortgages. I can see where the bankers would worry about "moral hazard." They want to keep their pirate booty!