FDIC TO MORTGAGE SERVICERS: FREEZE ARM RATES
October 8th, 2007Oh sure! HAHA
They know that the thing is hitting the wall. Change the rules, or the curtain comes down sooner rather than later.
Get your popcorn ready for this show. It’s going to be good.
Via: CNN:
The heat on U.S. mortgage lenders and servicers was turned up a few degrees this week when the country’s chief bank regulator publicly proposed that they permanently freeze interest rates on subprime adjustable-rate mortgages (ARMs) for many homeowners.
“Keep it at the starter rate. Convert it into a fixed rate. Make it permanent. And get on with it,” Federal Deposit Insurance Corp. Chairman Sheila Bair said in prepared remarks at an investor’s conference.
ARMs often have a low introductory interest rate for two or three years and then reset to much higher levels.
Roughly 1.3 million subprime ARMs are due for a rate reset between now and the end of 2008, according to data from First American Loan Performance.
Bair proposed that servicers convert only those ARMs that haven’t reset yet and only for borrowers who are current in their payments and occupy their homes. Loans taken out by speculators who don’t live in the homes they bought would not qualify for the automatic conversion.
Get your popcorn ready for this show. It’s going to be good.
i would, but i’m afraid i’ve lost my appetite…
Great. Sheila Bair wants to convert all the greedy, reckless, stupid FBs into lottery winners by making their neg-am teaser rates permanent. I guess the banks would be made whole with freshly printed Bernanke bucks from the discount window. Well that opens a whole new front in the War on Savers. As well as permanently crushing the hope that young people will ever be able to secure shelter for less than 10 X income.
In the sorry history of centrally planned post-capitalism, this is the worst idea yet. Makes the 1970s federal Chrysler bailout look like free market genius. Got gold?