Who'll rescue homeowners in the housing mess?

Big banks and the feds are working to throw an $80 billion lifeline to companies holding bad loans. But no one seems interested in rescuing families who need just a little help.

Nobody in the financial industry is saying that in so many words. But their actions speak volumes. While bankers have plenty of time to negotiate the terms of an $80 billion fund to rescue their own mortgage portfolios, customers are getting a busy signal if they want to fix a problem mortgage before it explodes into foreclosure or bankruptcy.

According to a Moody's (MCO, news, msgs) survey of the mortgage companies that service about 80% of all subprime mortgages, lenders have eased terms on just 1% of the subprime mortgage loans that reset to higher interest rates in January, April and July of this year. That's a huge problem, again according to Moody's, because data indicate that between 5% and 15% of subprime loans that are current before they reset will go into default after reset they if they are not modified.

And this is before the mortgage resets really hit the fan. Adjustable mortgage resets are projected to hit $55 billion in October, up from $22 billion in January, and then continue to climb until the market hits a peak of $110 billion in adjustable mortgage resets in March 2008.

A deluge of foreclosures
In other words, without some kind of modification of the terms, we're about to see an explosion of delinquency and foreclosure rates for subprime mortgages far above the 10% rate during the housing market's boom years. And the mortgage industry is doing almost nothing to head off the problems.

Nobody disputes that homeowners with less than sterling credit -- the so called subprime and Alt-A segments of the mortgage market --who used adjustable-rate mortgages to finance the purchase of a house over the past year or two face a crisis. Many of these mortgages are about to reset, from low teaser interest rates and monthly payments to much higher rates and payments.

Link to article: http://articles.moneycentral.msn.com/Investing/JubaksJournal/WhollRescueHomeownersInTheHousingMess.aspx

budget hurt for many years (paying housing as a 50% or more of budget item) or are just impossible to save.

Some banks are going into the community to save the easier 20% - but the rest of the folks are being ignored as wealth is lost in the minority communities as the down payments disappear.

Will they pay on the current value of the homes, or will they pay off the mortgages? Home-owner's insurance only covers the dwelling, not the land.

Its going to get ugly

they refused to pay claiming water damage was covered but not if the water damage was caused by a flood.

It really depends on the policy - many companies try to sell different "levels" of coverage where a cause of damage is covered at one level and not at another - or if covered at both levels, the extent of the coverage for that cause differs.


I never worked the casualty side of insurance - only the life/health/pension.and disability all in legal/tax/investment/actuarial/accounting design areas- so I only have a spectators knowledge of the homeowners insurance situation.

Those greedy homeowners, looking for a place to live, just sicken me. Some of them wanted homes with two or even three bedrooms! Overreaching fuckers. Deserve to get burned, and burned good. But those investment bankers, speculators, and loan folks need all the help our tax dollars can give them. Did you know that some of them are piloting last year's yacht at the marina? It's a scandal!

The nerve of some people! Don't these "so-called" "homeowners" understand that the world doesn't revolve around *them*

SHEESH!

it seems that no one except corporate executives with parachutes, military mercenaries on assignment or bomb makers can count on the stability of even one good-paying American job. Low-paying ones are even more unstable and at the mercy of consumer spending, and funds disappear for government services when communities' tax bases leave town or obtain unreasonable abatements that are not returned or invested to providing the tools, training, and welfare of their human resources in their own communities. Individuals become "wandering gypsies," constantly looking for jobs on a virtual highway to nowhere.

The rooted neighborhood community is history, and the children and families of whatever composition are suffering the consequences, not necessarily of their own making. The others, on the low end of law-abiding and on the high-end of wealth (who also seem to have forgotten selective laws, on purpose),have no intention of building communities unless it enhances their own agendas of upheaval and churn.

Not to mention that one's health can disappear just as easily.