Democratic presidential hopeful, self proclaimed savior to the poor, John Edwards, released a plan to end the “predatory” lending practices that have put millions of families at the brink of foreclosure. As part of his attempt to expand and strengthen the middle class, Edwards called for legislation aimed at regulating mortgage abuses and curbing predatory lending. He also proposed immediate actions including bankruptcy reform and a Home Rescue (bail-out) Fund, to provide relief for families who are at risk of loosing their homes.
"This is about the future of the middle class," "While Washington turns a blind eye, irresponsible lenders are pulling a fast one on hard-working homeowners. Using deceptive practices, hidden fees, and abusive terms, they have already taken billions of dollars from hard-working homeowners, destroying their nest eggs in the process. For too many families, homeownership has become a risky gamble when it should be the foundation of economic security. It's time to put an end to the shameful lending practices that are compromising our strength as a nation."
Edwards is hell-bent on preventing widespread foreclosures in impoverished communities. According to Johnny-boys website “Home foreclosure filings rose to 1.2 million in 2006—a 42 percent jump—due to rising mortgage bills and a slowing housing market. The increase in subprime loans and predatory mortgages, which carry abusive terms and excessive and hidden fees, has put more and more American families, especially families of color, at risk of ruining their credit histories and losing their homes. Additionally, economists are concerned that housing sector troubles could put downward pressure on consumer spending and the economy as a whole”
Edwards has proposed a plan to fight mortgage abuses and predatory lending and help families avoid foreclosure. Edwards' plan will:
1)“Enact a Strong National Law against Predatory Mortgages: As president, Edwards will pass a strong national law to prohibit the worst abuses in the mortgage market: loan flipping, mandatory arbitration clauses, balloon loans, steep prepayment penalties, and other excessive fees. (mortgage industry news) It would regulate all lenders, including non-bank finance companies, and strengthen underwriting standards to ensure that borrowers receive affordable loans suited to their means. Because abusive practices among some brokers are part of the problem, Edwards will ban broker kickbacks (yield-spread premiums) and work with states to establish uniform broker licensing standards and a national database for disciplinary infractions.
2)Rewrite Certain Abusive Mortgages in Bankruptcy to Let Families Keep Their Homes: Many victims of predatory lending owe more on their mortgages than their homes are worth. These "underwater" mortgages are created by excessive interest charges or falling home values. Even if they declare bankruptcy, they must pay off their inflated mortgages in full or else lose their homes. As president, Edwards will let homeowners shed excessive mortgage debt in bankruptcy. They will be able to keep their homes by paying off their full market values and get new loans terms set by the courts. For example, a family owing $120,000 on a home worth $100,000 could cut its mortgage to $100,000, with the remaining $20,000 treated like other unsecured debt in bankruptcy. The relief would be available only once and at the discretion of the bankruptcy judge.
3)Rescue Homeowners at Risk of Foreclosure: Many foreclosures can be avoided by timely help, such as renegotiating loan terms, finding a new lender, or catching up with past payments. Preventing foreclosures can also prevent vicious cycles that can bring down whole neighborhoods. Edwards proposed a national Home Rescue Fund to help prevent foreclosure. The Fund would work through local non-profits, government agencies, and community financial institutions. If necessary, the Federal Housing Administration, Fannie Mae, and Freddie Mac could work with community lenders to create affordable refinancing alternatives for these families.
4)Hold Lenders and Investors Accountable: Edwards commends the FDIC for summoning lenders and Wall Street investors to a meeting discussing their role in the crisis. However, these conversations will only succeed if lenders and Wall Street give regulators specific commitments to mitigate foreclosures, such as waiving prepayment penalties, restructuring loan terms, and forgiving of back payments. [Engel and McCoy, 2007; National Consumer Law Center, 2007]” (http://johnedwards.com/issues/predatory-mortgages/)
September 15, 2007: mortgage news daily: mortgage rates
MORTGAGE RATES TEATER-TOTTER WITH THE MARKET
After falling for over 14 days, 30 year mortgage rates edged began to perk up this week.
On Thursday, Freddie Mac reported that 30-year fixed-rates hit around 6.46% this week, up .01% percent from last week.
This is worth noting since last weeks rates were the lowest since 30-year loans averaged 6.42% in the last week of May.
Financial analysts attributed the static reading to the fact that the data over the past week came in close to theoretical expectations.
Freddie Mac’s chief economist Frank Nothaft said the housing slump is continuing to discourage price increases, mortgage industry news.
A Freddie Mac statement suggested that housing prices increased by 0.1% from April through June of this year. This represents the slowest three-month change since the last quarter of 1994.
Rates on refi-friendly 15-year fixed-rate mortgages hit around 6.15 percent this week, up .02% percent from last week. Rates on five-year adjustable-rate mortgages fell to .03% from last week’s 6.35%. Despite what looked like a rising trend, rates on 1-year ARMs dropped to 5.74% from 5.84%.
Most analysts feel that the Fed will soon decide to cut a key interest rate in an effort to protect our economy from recent mayhem in the housing industry and financial markets.
These rates do not include embedded costs. A fee of 0.5 point is attached to 30 and 15-year mortgages and .6 point is generally attached to 5 and 1-year ARMs.
This time last year 30-year mortgage rates were at 6.47%, 15-years were at 6.16%, 5-year ARMS were at 6.14% and 1-year ARMs averaged 5.63%.
