The draft bill says that "The Secretary (of HUD) may take such actions as may be necessary and appropriate to facilitate coordination between the holders of the existing senior mortgage and any existing subordinate mortgage to comply with the requirements." It doesn't say what necessary actions might be needed to force second lien holders to roll over and die--threats? bullying? shunning at cocktail parties?--but that's likely to be a sticking point given current second lien holder behavior.Industry sources that scanned the proposal have said that while the bill makes a good effort, there are likely to be issues with borrowers qualifying. And one source wondered if borrowers would go for it. "We're already seeing borrowers walk away," said one source, who manages a loss mitigation department at a national lender. "Would borrowers choose to stay in exchange for giving up much of the potential for future profits off of their investment, based on what could end up being only a nominal decrease in monthly cash outlay? I don't know."
Frank Proposes $300 Billion to Fund Short-Refis
House Financial Services Committee Chairman Barney Frank on Thursday announced new legislation that represents Capitol Hill's latest attempt to stem a significant rise in mortgage foreclosures. Under the proposed plan, the Federal Housing Administration would receive $300 billion -- $150 billion over each of the next two years -- to insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders. Tanta at the Calculated Risk blog opines: