Foreclosure Ban...Review for Obama's Modify Mortgage First

The Federal Housing Finance Agency (FHFA) is authorizing the extension of Home Affordable Refinance Program (HARP) until June 30, 2011. Also included in the HARP is the modification program. This is good news for those who need to refinance their homes but still have little equity in their home. TheTruthAboutMortgage.com reports that 24% of mortgages in America are "underwater". Meaning, there is a need for modification or refinance to lower payments and get payments to a managable amount.
The Obama Administration announced the foreclosure ban. Possible foreclosures under this plan would have to be reviewed for to see if they would qualify for the Home Affordable Modification Program first. TheTruthAboutMortgage said, "A document detailing the proposal obtained by Bloomberg said it 'prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed.'”
This plan is not approved, but many think it will not be shot down.

Frisco Mortgage News, FHA and Taylor Bean and Whitaker

The Federal Housing Administration or FHA suspended Taylor, Bean & Whitaker Mortgage Corp. Tuesday from making loans insured by the federal agency. This is another blow to one of the largest FHA lenders left, and how long they will be suspended, I don't know yet.
JAMES R. HAGERTY and LINGLING WEI wrote,
"The FHA said the Ocala, Fla.-based lender failed to submit a required annual financial report and to disclose to the FHA "certain irregular transactions that raised concerns of fraud." Taylor Bean has 30 days to appeal the suspension.
More
Colonial and Taylor Bean Offices Raided
Taylor Bean was the 12th largest U.S. mortgage lender in the first six months of this year, according to Inside Mortgage Finance, a trade publication. Among originators of FHA loans, Taylor Bean was the third largest in May, with a market share of 4%, according to the publication. Only Bank of America Corp. and Wells Fargo & Co. were larger.
Taylor Bean's woes are a major blow for hundreds of brokers and smaller mortgage banks that sell the loans they originate to the privately owned company. Those small mortgage companies will have to scramble to find new partners if they are to remain in the booming FHA lending business.
FHA loans have surged in popularity over the past two years as other sources of mortgage funding have dried up.

Lee B. Farkas, chairman of Taylor Bean, said in response to questions that he was unaware of the FHA action.

Ginnie Mae, a government agency that guarantees payments to holders of securities backed by FHA loans, said Taylor Bean is also barred from issuing securities backed by Ginnie. Ginnie said it will take control of nearly $25 billion of mortgage securities issued by Taylor Bean.
The moves came a day after federal agents raided the Florida offices of Colonial BancGroup Inc. and Taylor Bean. Taylor had been leading a group of investors that proposed to shore up Colonial by taking a stake in the Alabama-based bank but that transaction fell through last week amid heavy losses at Colonial."

Wow, right!?!?! It was said over a year now that the true broker would slowly be pushed out of this industry, and this is another blow to support that fact.

2009 Economic Forecast

Over a week ago, I was able to make it to the Ted Jones 2009 Economic Forecast. Ted is the Cheif Economist for Stewart Title. There are many great points he made, and in this Blog, I want to just touch one that made the most since to me as I have been thinking similarly throughout the past year. If you would like to read more about Ted's forecasting and thoughts, you can go to Ted's Blog.

The title of the portion I wanted to share is, "Loan Modifications Do Not Work".

In the forecast Ted revealed the statistics, "Data from banks show that more than half of loans modified during the first three months of the year were delinquent by 30 days just six months after the terms of the loans were changed, John C. Dugan, the comptroller of the currency, said at a conference in Washington. After eight months, 58 percent were delinquent again."
Ted went on to explain that our country spent money in an area of the economy that has a proven track record of failure and lack of responsibility. The sub prime break down and alternative lending catagories made loans available to people that had less than perfect credit history. Drug abusers are fare game in this illustration. Yeah, spending money above your means is not quite like sticking a needle in your arm and going to rehab for months to just come out and begin sticking needles in your arm again. On the other hand, these comparisons are congruent with the fact that history proves that humans are creatures of habit, and a person's character develops life's habits. In the end, changing one's own character is a very hefty goal to take on and few are able to take on such a challenge. Changing is hard.

Now, Ted didn't use the above to illustrate his points...they are all mine and I own these thoughts myself. In conclusion, is it right to put the major focus and control of getting our country out of this holewe are in into the hands of the same people who got us here in the first place? They have a track record of not planning and budgeting, and making rash emotional decisions when making purchases that eventually bring their lives and families into bankruptcy and foreclosure. Within the list of failed families and foreclosures, there is a large number that had little to no roll in the doom that they encountered because their jobs were lost and the income they had went away. I know that all families within this foreclosure group weren't led by an undisciplined person and some were a product of the economic environment. Lets not on the other hand, focus our efforts and put the control in the hands of the folks who previously failed. The above statistics show that this is exactly what has begun to happen. The failed mortgages that were modified are failing again.

What should we have done? Sometimes the experts and leaders of our country have to make decisions that don't necessarily feel right to the masses like a father does to his child. I'm not an economist, so I can't very well reflect on this subject in a concluding statement and offer the answer to our economic wows. It just doesn't sound right though to continue "putting the ball in the quarterback's hands that has a history of fumbling the ball".