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The Obama Mortgage Effect
November 13, 2008 by James K Barath, CMPS · Leave a Comment
Whether you like or dislike Barack Obama there has been pre-emptive domino effect with Wall Street banks and government agencies that has the markets running in circles. Everyone knows that the subprime debacle, homeownership, foreclosures and devalued real estate markets have been in the headlines and a primary reason that Democrats did so well in the general election. Now that there is a president-elect the entire world has been carefully listening & dissecting the future agenda of the new administration.
- “Close Bankruptcy Loophole for Mortgage Companies: Obama and Biden will work to eliminate the provision that prevents bankruptcy courts from modifying an individual’s mortgage payments. They believe that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law.”
It was Obama’s renewed vigor for this portion of his platform that forced the hands of the Federal Housing Finance Agency, Department of Treasury, FHA, Fannie Mae, Freddie Mac, FDIC, HOPE Now participants and major banking institutions to swiftly change the dynamics of their approaches and programs to assist distressed homeowners. These modifications appear to be beneficial to consumers on the surface in the short-term.
Unfortunately, it will be investor appetite for the underlying securities that create the capital to lend that will dictate the long-term effect of this Obama effect. Judicial loan modifications would create an asset that would carry greater risk than equities because a judge could modify the term, interest rate and principal balance. If investors have no guarantee that the assets they are buying have legal terms, they will either leave the market and/or require greater returns for their cash. This would ultimately cost consumers more and not less.
About the Author: James K Barath is a Certified Mortgage Planning Specialist, qualified liability advisor and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James Barath today for your Borrow Smart Analysis - the CALM Approach to Borrowing ! His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy! 