To the Editor
There is news of yet one more mortgage assistance program coming down the pike compliments of the federal government, designed and sponsored by President Obama and paid for by we the people. In this one he claims that a fee of some kind to the financial institutions will somehow eliminate corruption by the bank hence enable millions of responsible homeowners to refinance their home mortgages and save $3,000 a year by using this program. Moneynews.com has just reported that PIMCO (Pacific Investment Management Co.) stated $25 billion foreclosure deal to hit pensions harder then banks. The government's deal with banks over their foreclosure practices is cheap for loan services while costly for bond investors including pension funds. The mortgage head at PIMCO said, "This was a relatively cheap resolution for the banks. A lot of the principal reductions would have happened on their own anyway and they're using other people's money to pay for a ton of this. Pension funds, 401Ks and mutual funds are going to pick up a lot of the load." I thought he just said this program was to help responsible homeowners. Hmmmm.
In this country today and yesterday, responsible homeowners can already refinance their homes on their own without a government program. If you own a home, you make your payments on time, you have consistent income and you are not upside down, well then of course you can refinance and get a better rate and save thousands off dollars a year. Of course you can do that. Why do people believe that Obama has to spend more in taxpayer money to create something that already exists? If a home value is worth less then the mortgage on the time then you are upside down and without equity. Without equity no bank will refinance anyone regardless of how responsible they are and regardless of any government program. This is a fact.
Government officials say the costs will be funded primarily by the banks, not third party investors. The banks will get different amounts of credit for various types of borrower aid, with loans in government backed mortgage bonds exempted. The $250 billion PIMCO Total Return Fund last month was 50 percent invested in mortgage debt, typically government backed securities, according to it's disclosures. An advocate for mortgage forgiveness, Laurie Goodman a securities group analyst, testified to Congress saying, "There is a difference between principal reductions and giving banks credit for spending other people's money." This is like telling a kid, if you do something bad I am going to fine you $10, but if you can steel $22 from your mom, you can pay me with that.
The mortgage assistance programs available today by the Obama administration are nothing to help people stay in their homes, they are programs to help people lose their homes more effectively, short sales. HAMP (Home Affordable Modification Program), a.k.a. re-doing the mortgage for a lesser amount, doesn't work, because the homeowner is without equity and without income so he does not qualify. You must officially be in HAMP to qualify under the regulations that govern HAMP and mandate lenders to work with homeowners. Is your head spinning yet?
This refinance assistance is helping no one. Especially when values are still going down and jobs are so scarce. Jobs are how people pay their bills, jobs are what create income. Income is what is needed to qualify for mortgage assistance and mortgage refinancing. Without jobs no mortgage program in the world is going to help anyone because you still have to be able to pay Mr. President.
So let's re-cap. What did I just tell you? President Obama said bad banks. Here is $25 billion in taxpayer money that I really don't have, I just printed it to give to you, bad banks, to help responsible homeowners stay in their homes. Since no one really can refinance because no one has equity or income this money is really for you, bad banks, to invest in all this mortgage debt and you get to access it by not complying in my assistance program. I will tell everyone I am fining you bad banks for not complying but I will give you a credit if you pay me with other peoples money. This will just keep it all going and we will make lots of money off our citizens loses. The more of their assets we take the less likely they are to recover. Then I will rule the world. It's Pinky and the Brain.
St James City