I've been providing some very in-depth advance coverage of the subprime ARM freeze, ahead of the formal announcement made today by President Bush. HW readers were not likely surprised by any of what they heard, and likely know more about the guts of the plan than what was discussed today. There's obviously plenty out there today discussing the bailout effort - I want to highlight a few items of interest. The quick and dirty: The WSJ provides a good consumer-oriented overview of the plan, if that's your sort of thing. American Banker has what appears to be the most definitive outline of plan details (subscription only, but subscriptions are free this week and worth your time to register). What's catching my eye today about the plan is that freeze-eligible borrowers must have a CLTV of 97 percent or below based on the original appraisal at origination, in addition to the rest of the qualifications. That's going to end up being limiting, for one thing, given the preponderance of 100 percent financing; for another, it means that this bailout does not solve for those borrowers caught in a downward spiral of price declines. The geeky: Beyond some of the reporting here yesterday that covered investor reporting on loan modifications, Tanta over at the Calculated Risk blog weighs in on how the details of the bailout program end up being rather anticlimactic -- and I'd agree, although I'm still concerned about expanding municipal bond programs to accomodate subprime refinancing activity. (HW readers should keep in mind that the freeze plan is very different from funding refinancing activity.) She also tackles in some significant detail the issues surrounding whether this program is really a challenge to contract law, as some have suggested (it doesn't appear so). The funny: Homeowners watching President Bush's speech with aniticipation were certainly thrown off when they tried dialing the phone number he provided in his speech. From CNN:
As he announced his plan to ease the mortgage crisis for consumers, President Bush accidentally gave out the wrong phone number for the new “Hope Now Hotline� set up by his administration. Anyone who dialed 1-800-995-HOPE did not reach the mortgage hotline but instead contacted the Freedom Christian Academy — a Texas-based group that provides Christian education home schooling material.
Something tells me that the Freedom Christian Academy will have one heck of a phone bill this month. The future: As I'd commented earlier, it appears that this plan won't be the end of the debate over "helping borrowers." The Wall Street Journal reports that the plan has drawn battle lines between consumer advocates, industry participants, and the average Joe that didn't play fast and loose in the mortgage borrowing game:
In unveiling a plan to help more than one million struggling homeowners, the Bush administration and the mortgage industry have embarked on a controversial project: picking winners and losers from the rubble of the subprime-mortgage meltdown.
Not only that, but nearly every political candidate with a serious shot at contending for the White House bid in 2008 now understands that their meal ticket is riding on the housing gravy train -- and not on the war in Iraq. Wherever you sit on the political spectrum, you can be sure of one thing: the gamesmanship has just started here, and none of what's to come will really be about "helping borrowers," but about winning an election. Keep that in mind the next time a candidate proposes a 90-day national foreclosure moratorium.