How Will Fannie and Freddie Deal With The Second Mortgages?

BailoutThe news is inundated with talk of Federal bailouts of the housing market and reworking mortgages, but one of the real impediments is the second mortgage. You remember them, they are the 20 of the infamous 80–20 loans that were the rage a few years ago.

Well, the second mortgage holders have a stake in the homes that are now underwater, and they are trying to protect their assets. And you know what, I do not blame them.

But even when the second mortgage holder wants to deal, their offices are overworked and the time drain is being a huge hindrance to getting mortgages reworked. Fannie Mae and Freddie Mac have both been tasked with implementing Obama’s housing plan, but the banks that are holding the ND Mortgages have a seat at the table, and could slow down the process.

The law of unintended consequences strikes again.

Those relatively modest investments, or second liens, allow lenders to veto the refinancing plan and they might do so since those small stakes add up to big dollars.

Bank of America held $148 billion in second liens at the end of last year, while JPMorgan Chase held $131.4 billion and Wells Fargo & Co. held $129.9 billion, according to Inside Mortgage Finance.

Since Fannie Mae and Freddie Mac were effectively nationalized in September, the government has used the mortgage-finance companies to try and alleviate the housing crisis. Private banks, however, are more difficult to control.

Last week, the Treasury Department hosted a meeting of large mortgage servicers to discuss the question of second liens and the broader housing rescue. Reuters.

Related posts:
  1. Japan Ditching Fannie Mae and Freddie Mac Model
  2. Federal Reserve Initiates 9.9 Billion Dollar Loan Modification Plan
  3. Mortgage Bankers Association Propose Dismantling of Freddie, Fannie
  4. Fannie and Freddie Fail To Meet Low Income Lending Goals
  5. Freddie, Fannie Give Christmas Present – No Foreclosures Till New Year

There Are 3 Responses So Far. »

  1. Ridiculous. Don’t bail them out, let them tank and then rebuild from the ashes.

  2. Oh well, let’s see this second mortgages news progress in the next days.

  3. The only way to correctly modify and restructure these mortgages is to completely cut the second mortgage out. It really makes no difference, the next step is a short sale where the second mortgage would meet a similiar fate.

Post a Response

« Back to text comment
  • Popular

    Most Comments

    Search

    Tags

    Archives

  • Recent Comments

    • Well Tom, once again you have said it much better than I could have. Unfortunately the folks at Move, ...
      Joe Spake | 7Nov09 | More
    • It certainly does not bode well for a fast recovery in the economic climate. This will affect all real estate ...
      Antony Lexington@Home loan | 7Nov09 | More
    • I HAVE 25 YEARS EXPERIENCE IN TELECOMMUNICATIONS..HOW DO I APPLY AT KAI.
      ROBIN SPURLIN | 6Nov09 | More
    • Definitely not a fan of Move Inc.!!!
      Tony Sena | 6Nov09 | More
    • A lot of you really need to go back to kindergarten and learn to spell correctly. If you cannot spell ...
      SpazzyCat | 6Nov09 | More
    • In 2008, there was an extension to push first-time home buyers to purchase their homes quickly since the program did ...
      Mary | 6Nov09 | More
    • I also need HELP and don't know what to do about my problem. I have a garden apartment off ...
      Cheryl Gungor | 6Nov09 | More
    • I have the same situation. I sold my home in July and am scheduled to to close in a few ...
      Arlo Moehlenoah | 6Nov09 | More
    • My cousin in Maryland going thru same thing as Jack Thomas. Have loan Mod Agreement from Countywide dated April 2009, ...
      Trying to help BoA customer | 6Nov09 | More
    • Print Ads is the popular way to advertise among seniors in the business industry but today it seems like it ...
      Central Oregon Homes | 6Nov09 | More
  • Statistics

  • Friends

  • Recent Friends Visiting

  • Subscribe





    Get Updates Delivered Daily By E-Mail:

    Delivered by FeedBurner