It's all on the theory that if we can someone keep delaying the reckoning just a wee bit longer, something might happen that saves us all. Hey, maybe the CDO market will restart, and investors will start buying mortgage-backed-securities again!
Of course, there is the desire to just hold the problems off long enough that they will be someone else's problem. Politicians are only thinking about their current term. It's better to make things even worse with a half-cocked bail-out so long as that will delay the collapse for the next office-holder to deal with.
This kind of delaying behaviour is perfectly normal human behaviour. Just look at how long it took Japanese banks to write down bad loans in the '90s. Heck, many of those bad loans from the '80s STILL aren't properly accounted for!
I think it's even more fundamental. You ever see a sports team down by an insurmountable amount with a short time remaining? Most of the time, they fight on, even if it's only at half speed. They keep swinging in the 9th down by 10, or they keep trying to score down by 21 pts with under a minute left.
People who are good at what they do hate to admit defeat. Above and beyond any rational reasons, I think the bankers don't want to admit they screwed up.
unfortunately, people are generally going into foreclosure not because of rates or payments, but because the home's value has gone down and there is no reason to keep fighting for the home. No equity = no fight.
Unless Paulson and these banks can figure out how to give debtors some skin in the game, all the "Lifeline" amounts to is another month of rent-free living.
Unless Paulson and these banks can figure out how to give debtors some skin in the game, all the "Lifeline" amounts to is another month of rent-free living.
It's mildly ironic that the banks themselves fought so long and so hard to teach people that this kind of behavior was appropriate. Way back in the day, it was shameful to foreclose (or go into bankruptcy). But then, people didn't run up the same kinds of debts so it wasn't generally much of a problem. Of course, people not running up enough debt was a problem for the bankers.
This is kind of like the old "on schedule, on budget, or on spec...choose 2" line. "Low debt, low defaults, or low inflation...choose 2."
Countrywide Financial Corp., the troubled lender that helped fuel the housing boom and subsequent credit crisis with high-risk mortgages, is expanding help for subprime borrowers threatened with losing their home.
The nation's largest mortgage lender, working in conjunction with community organization ACORN, said yesterday that it intends to become an industry leader in foreclosure prevention and "home retention." The lender said it will offer "workout programs" to any of its struggling subprime borrowers with a capacity to make monthly payments -- not just those with hybrid adjustable-rate mortgages about to reset............
.........The program will broaden mortgage relief previously offered through an industry-backed HOPE NOW alliance program as well as through a previously announced $16 billion home retention initiative from Countrywide, ACORN and Countrywide officials said. The initiative took effect Jan. 31 and is offering help to borrowers in various stages of mortgage delinquency as well as borrowers who are current in their payments...........
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Comments
It's all on the theory that if we can someone keep delaying the reckoning just a wee bit longer, something might happen that saves us all. Hey, maybe the CDO market will restart, and investors will start buying mortgage-backed-securities again!
Of course, there is the desire to just hold the problems off long enough that they will be someone else's problem. Politicians are only thinking about their current term. It's better to make things even worse with a half-cocked bail-out so long as that will delay the collapse for the next office-holder to deal with.
This kind of delaying behaviour is perfectly normal human behaviour. Just look at how long it took Japanese banks to write down bad loans in the '90s. Heck, many of those bad loans from the '80s STILL aren't properly accounted for!
People who are good at what they do hate to admit defeat. Above and beyond any rational reasons, I think the bankers don't want to admit they screwed up.
Unless Paulson and these banks can figure out how to give debtors some skin in the game, all the "Lifeline" amounts to is another month of rent-free living.
It's mildly ironic that the banks themselves fought so long and so hard to teach people that this kind of behavior was appropriate. Way back in the day, it was shameful to foreclose (or go into bankruptcy). But then, people didn't run up the same kinds of debts so it wasn't generally much of a problem. Of course, people not running up enough debt was a problem for the bankers.
This is kind of like the old "on schedule, on budget, or on spec...choose 2" line. "Low debt, low defaults, or low inflation...choose 2."
Countrywide, ACORN join in homeowner aid
Countrywide Financial Corp., the troubled lender that helped fuel the housing boom and subsequent credit crisis with high-risk mortgages, is expanding help for subprime borrowers threatened with losing their home.
The nation's largest mortgage lender, working in conjunction with community organization ACORN, said yesterday that it intends to become an industry leader in foreclosure prevention and "home retention." The lender said it will offer "workout programs" to any of its struggling subprime borrowers with a capacity to make monthly payments -- not just those with hybrid adjustable-rate mortgages about to reset............
.........The program will broaden mortgage relief previously offered through an industry-backed HOPE NOW alliance program as well as through a previously announced $16 billion home retention initiative from Countrywide, ACORN and Countrywide officials said. The initiative took effect Jan. 31 and is offering help to borrowers in various stages of mortgage delinquency as well as borrowers who are current in their payments...........
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