Gulf State Debt Mess 'Not Going To Work'
The LA Times reports on the foreclosure mess in the gulf states. "Across the nation, an average of 4.44 percent of all mortgages were behind by at least one payment, while in Mississippi the figure was 17.44 percent and in Louisiana 24.63 percent.""As unpaid home-loan bills pile up, mortgage companies and owners of hurricane-ravaged property are still unsure what federal assistance they might get, and uncertain if they can salvage their investments."
"After Katrina and Rita struck, the mortgage industry granted victims an initial 90-day reprieve from payments, late fees and damaging reports to credit agencies. Most home lenders, including the two biggest, Countrywide Financial Corp. and Wells Fargo & Co., have added another 90 days of forbearance for borrowers who need more time. But strains are showing in the fourth month since New Orleans' levees gave way."
"Perhaps 80,000 to 100,000 homeowners whose homes were inundated had no flood insurance, according to Mortgage Bankers Association. Thousands of borrowers have yet to contact their lenders, increasing the odds of foreclosure, bankers and regulators said."
"What's more, Louisiana officials said they have received hundreds of complaints about lenders demanding large balloon payments to bring loans current."
"'This is a big, big deal,' said Rep. William Jefferson, D-La. 'Many of the homeowners are not in their properties and cannot get back into them. Meanwhile they are being required to make lump-sum payments for properties they can't live in. The combination is not going to work.'"
"Demands are coming from certain so-called 'subprime' lenders, who specialize in mortgages for people with credit problems, and other pockets of the market that are not underwritten with the prime lending standards used for traditional loans."
posted by Ben Jones @ 7:07 AM
2 Comments:
What is unbelievable about this situation is; what did they think was going to happen? The US government doesn't have any excess cash. The one quote about the Feds coming to the rescue is a joke.
A key thing here for housing bubble watchers: if the Feds can't bail out a few cities on the low priced gulf, what are the chances they can save San Diego borrowers?
cassandra,
You're absolutely right. And while we'll on the subject, what about the tornado alley counties that continue to allow mobile homes to be placed on land that is devastated yearly by tornados? I've read an article about one family that lost 3 homes (all manufactured) but continued to get bailed out by various programs and then they turn around and buy another flying tin can.
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