Fed urges loan holders to avoid defaults

[Eugene]

Source: Associated Press

Fed urges loan holders to avoid defaults

By MARTIN CRUTSINGER, AP Economics Writer
58 minutes ago

WASHINGTON - The Federal Reserve and other banking
regulators issued special guidance Tuesday urging loan
service companies to work with borrowers in danger of
defaulting on their home mortgages.

The new guidelines are not mandatory, but the regulators
expressed the hope that companies that collect payments
on mortgages would heed the advice.

Sheila Bair, chairman of the Federal Deposit Insurance
Corp., said that mortgage collectors have the authority
under existing accounting and tax rules to help deserving
borrowers.

"More and more consumers with subprime and hybrid
mortgage products are facing the very real prospect of
losing their homes through foreclosure as their payments
reset and become unaffordable," she said in a statement.
"It is vital that mortgage servicers work proactively
with borrowers facing much higher payments as their
interest rates reset."

-snip-

Read more: http://news.yahoo.com/s/ap/20070904/ap_on_go_ot/mortgage_defaults

[Delphinus]

1. It will be interesting to see what they actually do.

In some ways, it reminds me of a parent cajoling their youth to do the right thing.

[beberocks]

2. A little late now.

Most people are defaulting because they bought a house they couldn't afford. Most foreclosures here in Sonoma County are for jumbo loans--it's not like a little overtime will fix the problem. Buyers got caught up in the real estate boom and signed up for whatever loan they could. The problem is the lenders handed out huge loans like they were candy. Criminal IMO.

[AndyTiedye]

6. When Was The Last Time You Could Buy Anything for Less than a Jumbo in California?

[daleo]

3. Fed urges loan holders: "be nice"

As if.

[Orsino]

4. Fed urges people running out of money to avoid running out of money.

Prop up trickle-down economics until the very last possible second, please.

[olddad56]

7. and should they run out, Fed is urging loan holders to lend them more.

[Hugin]

5. "new guidelines are not mandatory"

:rofl: <--- How they'll be met by the lenders.

How can the Fed consider themselves a 'regulatory' agency?

[depakid]

8. which means that if one company follows them

it's at a comparative disadvantage vis a vis those who don't.

All this amounts to is finger wagging to garner headlines- fiddling while Rome burns.