Officials Working With Banks To Refinance Underwater Mortgages: Report

Officials and big banks are working on a plan that would make refinancing available to some borrowers whose houses are worth less than their loans, so long as they are current on mortgage payments, the Wall Street Journal reported.

Such borrowers typically are not able to refinance because they lack equity in their homes. The plan would apply only to mortgages owned by the banks, the Journal said, citing people familiar with the matter.

Federal officials have been trying to broker a settlement with the five largest mortgage servicers - Ally Financial Inc, Bank of America, Citigroup Inc, J.P. Morgan Chase and Wells Fargo & Co -- the Journal said.

It is not clear how many borrowers would qualify for help, the paper added.

Officials are pushing for a plan in a bid to break a legal impasse with big banks over alleged foreclosure abuses and ease problems in the housing market, the paper said.

Discussions are still fluid and any final outcome is uncertain. Talks between government officials and the banks are expected to continue this week, the newspaper said.

JPMorgan declined to comment to Reuters on the Journal report. Reuters could not immediately reach the other four lenders for comment outside regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Vinu Pilakkott)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[NamithaSF]

07:58 PM on 10/18/2011

This would have to be mandatory; otherwise the banks will not issue such refis.
It's a good idea in principle, I just doubt it will get done.

[gonewiththebid2]

07:21 PM on 10/18/2011

Again who do we have to thank for this? Who makes the laws? Who can change the laws. I believe it is the congress, senate and president. From Reagan to La Bamba. All this deregulation has set the wheels in motion for the American way of life to change to that of a third world nation. Like I always like to say follow the money trail. It will take you to those responsible.

[anonymous67]

05:32 PM on 10/18/2011

Screw the help -- it's a three years too late. And is just be ANOTHER bailout for the banks -- NOBODY is looking out for the citizens.

Meanwhile, fraud, perjury and lying to Congress are very SERIOUS crimes. Prosecute these criminal enterprises to the fullest extent of civil and criminal law -- and put guilty in prison. The America people DEMAND justice.

[BonnieDoon]

04:03 PM on 10/18/2011

Yet again, too little; too late.

[spirit of it]

03:53 PM on 10/18/2011

It’s just a corrupt system of greedy bankers and greedy irresponsible home buyers and speculator-investors drooling over the quick money of an obvious bubble, and all wanting to get bailed out when the bubble bursts. Then support the big consumer inflated irresponsible egos that use all their equity for toys and other schemes to get rich from. All these should pay the costs of their greed. They enjoyed the benefits while the greed of funny money danced. These aren’t “Innocent victims”, they knew what they were doing, they know the difference between and fixed and variable rate loan. Does it really matter if the loan isn’t easily traced? These were fraudulent loans to fraudulent buyers and liars. All these buyers, bankers, and supporters exist in a moral black hole because of their greed and support of this evil system. We all should have a home, but in the right way when we can afford it and not pass the costs to others who can’t afford it or who are more responsible. The ignored, discouraged, and marginalized responsible hopeful home buyers, not the greedy counterfeit owners and investors, are the ones who need and deserve help of buying an affordable house instead of making them slaves. Hopefully Occupy Wall Street will support true responsibility of a fair world

[floodberg]

03:04 PM on 10/18/2011

ASK YOURSELF: WHY ON EARTH A BANK WOULD REFI AN UNDERWATER HOME WHERE THE MORTGAGEE IS CURRENT?

Money in refi fees paid by the government.  You'll notice there's no mention of write-downs.   This certainly won't benefit homeowners. 

THIS IS A BAILOUT FOR THE BANKS BEFORE THESE LOANS GO BAD.

[camary]

03:01 PM on 10/18/2011

The article said they're not sure how many people this plan would help. They know, but they're not saying because the number is very low. It's just pure spin as most mortages were rapidly sold, put into tranches and then sold again to unspecting pension, plans, etc. Once again, an anemic plan that just addresses the
margin of the problem.

[rogergoldkin]

02:04 PM on 10/18/2011

This would help free up buying power that can be used to restart this economy. Nothing more.

[kvanness]

02:12 PM on 10/18/2011

"Nothing more."

You sound like that is a bad thing...

[rogergoldkin]

03:14 PM on 10/18/2011

It's a very good thing. It lowers people's payments. Lower payments makes that home more affordable and therefore reduces the likelyhood of that home being abandoned. It also increases discresionary income as those monthly house payments are reduced.

[Mister Grumpy]

01:52 PM on 10/18/2011

If there is enough profit in it for the banks....... the plan will succeed........... but that is a BIG IF......

[kimdreams1]

01:08 PM on 10/18/2011

Whose house it is, is part of the issue. Show me proof and I'll get out of the house. Until then, consider me the housekeeper/handyman, gardner and taxpayer making sure the house is in tip top shape for the next occupant.

[ReaItors Are Liars]

01:22 PM on 10/18/2011

If you're in default, we know it's not yours.

[kimdreams1]

12:29 PM on 10/18/2011

Wow, I'm just so tired of all of this nonsense. For the people it will help, God bless em. But what about the other hundreds of thousands of homeowners that have been foreclosed on illegaly? What about those that are behind on their payments and have exhausted all of their resources? What do you say, see you later thanks for playing. Oh the madness of it all.

[ReaItors Are Liars]

12:48 PM on 10/18/2011

What about the hundreds of thousands who have defaulted and are still living in someone elses house?

[frank day]

04:37 PM on 10/18/2011

Do you notice that people are now ignoring you?
You've made yourself persona non grata. Well done.

[Laura Royer]

02:00 PM on 10/18/2011

I agree, those people need help too. But it would be nice for those of who've been able to keep up with things to get a little relief too.

[patemuse]

04:11 PM on 10/18/2011

No kidding, Our mortgage payment is our first priority. It is manageable, however, with this economy and being self employed the belt is so tight that we are needing to find creative ways to keep afloat. "Craig's List" loves me.

[dukeitout]

12:27 PM on 10/18/2011

What does this plan do to reduce the inventory? Not much. High inventory means very low demand of new homes. Low inventory means more building and higher employment. Wouldn't the money be better used if the government bought empty inventory homes from the mortgage holders and sold them at really low AFFORDABLE prices. What is an affordable price?--- say a price equal to the amount the person currently pays for rent after discounting for the taxes required to be paid on the home. One problem in this----who is the mortgage holder? Ownership is questionable in view of the forgery problems on the homes. What a mess!

[demilieu]

01:27 PM on 10/18/2011

People expect to pay bargain basement prices for a house these days. No matter how low it's priced, no one expects to pay that number. It's in part from excess inventory, but there's also a larger mental attitude about home ownership that has taken hold.

[ReaItors Are Liars]

01:31 PM on 10/18/2011

People expect to sell their house at grossly inflated prices for these days. No matter how high it's priced, it's never enough. It's in part from the Housing Fraud years of 1998-2010, but there's also a larger reaItor spun lie that housing is an investment when it never actually was.

[Laura Royer]

12:14 PM on 10/18/2011

I do hope this happens. It may not help a ton of people but it would help some, including myself. Giving people who are current on their bills an extra 200-300 a month in their pockets will help the economy. I've been trying to refinance for about 18 months, but my place just keeps going further and further under water every single month as my neighbors do short sales or walk away. At this point, if I am not able to refinance soon, I'm going to follow in their path. My divorce agreement requires me to either refinance by the end of this month, or put the place up for sale. If we sell it in this market, we could bring in maybe 40% of what we bought it for. It would be in everyone's best interest to keep people from walking away when it could easily be prevented.

[ReaItors Are Liars]

12:27 PM on 10/18/2011

So who are you expecting to pay for your loss?

[Laura Royer]

12:33 PM on 10/18/2011

Hopefully no one, if I am able to refinance. That's not looking very possible though.

[demilieu]

01:29 PM on 10/18/2011

You can, thank you. If you actually pay any taxes, that is.

[advfincon]

01:31 PM on 10/22/2011

If you are in california please call me.....you need to short sell and move on with your life. staying in this home is costing you lost money every day. www.newfoundationre.com

[Readcomment]

11:43 AM on 10/18/2011

Now the banks are insisting on solid underwriting standards. Too bad they didn't show the same level of financial responsibility when they originally issued the mortgage or purchased mortgages for packaging and resale. The govt. (Treasury) should have imposed refinancing and other obligations on the banks when it implemented TARP. That didn't happen because the Treasury is comprised of former Wall St. execs. Funny how these Treasury guys knew how to negotiate and structure a deal when they wanted to make money while working on Wall St., but have convemiently forgotten how to do it since arriving in Washington. Result: The American public got screwed (once again) and their Wall St. friends and former colleagues got a really sweet deal. No shame.

[dukeitout]

12:09 PM on 10/18/2011

You nailed it!

[Nic the wonder puppy]

11:41 AM on 10/18/2011

I'm looking into my doggy bowl, it says it will help 5 families

[portfolio]

11:46 AM on 10/18/2011

a LOL badge for Nic