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John Taylor is president and chief executive of the National Community Reinvestment Coalition, and he's among those calling for a foreclosure moratorium -- and not just because the paperwork was awry. We spoke this afternoon.
Ezra Klein: Why do we need a foreclosure moratorium? What will we gain from it?
John Taylor: Foreclosures are the single biggest contributor to the undermining of the market. What we need to do is put a brake on foreclosures, not accelerate them. They’re the enemy of recovery. We need to manage them so that the mortgages that can be modified are.
EK: But won’t that just freeze the markets and throw everything into more chaos? And as for the homeowners, most of them will end up being foreclosed on anyway. We’ll have delayed the inevitable, adding uncertainty to economic pain.
JT: Those are people who don’t understand what’s happening in the crisis. The point of a moratorium is to give the counselors and the attorneys time to negotiate a fairer, more responsible mortgage product. Mortgages where properties have been abandoned and the banks are repossessing them should go forward. But in other cases, where people have just lost jobs, we can be more patient. Citibank has given those people six months to get back on their feet. That’s what we need, not greasing the skids of this process. People need to understand, every time there’s a foreclosure, if you’re near that house, your property value goes down.
EK: The property-value issue doesn’t get enough attention, I think. But in a new paper, Third Way argues it cuts in the other direction: Removing foreclosures from the equation makes it easier for people to strategically default, as they won’t get kicked out. That will lead to more defaults and thus lower property values.
JT: Bring me a live body. Where are these people waiting to jump into foreclosure? People are in foreclosure because they have no choice. There isn’t a group waiting to pounce on the foreclosure process.
EK: It doesn’t sound to me like you’re looking for a moratorium so much as loan modification. Why not just do that?
JT: They have to be coming hand-in-hand. The point of the moratorium is that it would force the lenders and servicers to the table and it would give those with expertise in working out these problems the time to come up with rational and reasonable solutions, like modifications and refinances.
EK: How long should this moratorium be?
JT: The government has to say, "Okay, there’ll be six to eight months, and after that, we’ll assess whether this is working." And working means that foreclosures where there’s no income or hope of income go into the pipeline and those with income get a responsible loan matching their ability to pay. And the government can say, "Look, lenders, if you want to be able to sell mortgages to the federal housing authority, if you want to use the federal funds window, work with us. We stabilized your industry, after all." And there’s of course more leverage from Fannie and Freddie.
EK: And if we did this, how many of the 11 million or so foreclosures can we expect to modify and prevent?
JT: I would say 50 percent.
EK: Fifty percent?
JT: The reason I say that is that if you listen to what the government and banks say they’ve modified, they’re looking at 3.5 million. If you accept those numbers, that’s about half of the six or seven million foreclosure filings we’ve seen. If we can help half of 11 million people, that’s a huge impact.
EK: And you don’t worry about an intervention like this freezing the market? Insofar as we're inching back to normalcy, that’s at least partly because markets are working normally. If I understand what you’re saying correctly, it’s that a moratorium makes sense not just due to paperwork problems but as a housing policy. But if the government freezes these contracts in order to open them up, that’ll be a whole new ballgame for everyone invested in, or connected with, these industries, both now and in the future.
JT: No, I don’t. We’re not out of the woods with this economy. We’re deep in the jungle. We’re still looking at twice as many foreclosures as we’ve already experienced, and if unemployment gets worse, those numbers will go higher. Unless this situation gets managed, properly, we’re going to continue to have foreclosures dragging down our economy. Things may be going well on Wall Street, but it’s really not going well on Main Street. If people think we’ve gotten through this, they’re really misguided.
This is beyond just the robo-signing and the paperwork. This is a continuing continuum of bad practices and fraudulent lending that got us into this situation. And yes, some of those institutions that did the worst of it are gone, but other institutions have purchased them -- and that means they purchased their responsibilities, too. These homeowners were thinking that the bank wouldn’t be making them a loan if they couldn’t pay it back. They were told interest rates were going down, that they could do this, and they believed it. The responsibility began with the lenders, and it still lies with them. Dodd-Frank actually had to legislate that you can’t make a loan to anyone who doesn’t have the ability to pay. The fact that we had to legislate that tells you how far our financial-services sector fell.
Photo credit: Jim R. Bounds.
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Fox <b>News</b> Fair And Balanced | MSNBC Political coverage | Mediaite
If one believes that the cable news landscape is symptomatic of our two-party political system, then one also probably and predictably saw a different tone in last nights election results. Fox News presented its coverage with a patina ...
Britain Orders Inquiry Into <b>News</b> Corp.'s BSkyB Bid - NYTimes.com
Vince Cable, the British business secretary, ordered the communications regulator Ofcom to conduct an inquiry into News Corp.'s bid to take over the satellite television company BSkyB.
Facebook "Unlike" Button Comes to the <b>News</b> Feed
Facebook quietly introduced an "Unlike Page" button into its News Feed recently, which allows users to opt-out of receiving unwanted messages from pages they had previously said they ...
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We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.
User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.
John Taylor is president and chief executive of the National Community Reinvestment Coalition, and he's among those calling for a foreclosure moratorium -- and not just because the paperwork was awry. We spoke this afternoon.
Ezra Klein: Why do we need a foreclosure moratorium? What will we gain from it?
John Taylor: Foreclosures are the single biggest contributor to the undermining of the market. What we need to do is put a brake on foreclosures, not accelerate them. They’re the enemy of recovery. We need to manage them so that the mortgages that can be modified are.
EK: But won’t that just freeze the markets and throw everything into more chaos? And as for the homeowners, most of them will end up being foreclosed on anyway. We’ll have delayed the inevitable, adding uncertainty to economic pain.
JT: Those are people who don’t understand what’s happening in the crisis. The point of a moratorium is to give the counselors and the attorneys time to negotiate a fairer, more responsible mortgage product. Mortgages where properties have been abandoned and the banks are repossessing them should go forward. But in other cases, where people have just lost jobs, we can be more patient. Citibank has given those people six months to get back on their feet. That’s what we need, not greasing the skids of this process. People need to understand, every time there’s a foreclosure, if you’re near that house, your property value goes down.
EK: The property-value issue doesn’t get enough attention, I think. But in a new paper, Third Way argues it cuts in the other direction: Removing foreclosures from the equation makes it easier for people to strategically default, as they won’t get kicked out. That will lead to more defaults and thus lower property values.
JT: Bring me a live body. Where are these people waiting to jump into foreclosure? People are in foreclosure because they have no choice. There isn’t a group waiting to pounce on the foreclosure process.
EK: It doesn’t sound to me like you’re looking for a moratorium so much as loan modification. Why not just do that?
JT: They have to be coming hand-in-hand. The point of the moratorium is that it would force the lenders and servicers to the table and it would give those with expertise in working out these problems the time to come up with rational and reasonable solutions, like modifications and refinances.
EK: How long should this moratorium be?
JT: The government has to say, "Okay, there’ll be six to eight months, and after that, we’ll assess whether this is working." And working means that foreclosures where there’s no income or hope of income go into the pipeline and those with income get a responsible loan matching their ability to pay. And the government can say, "Look, lenders, if you want to be able to sell mortgages to the federal housing authority, if you want to use the federal funds window, work with us. We stabilized your industry, after all." And there’s of course more leverage from Fannie and Freddie.
EK: And if we did this, how many of the 11 million or so foreclosures can we expect to modify and prevent?
JT: I would say 50 percent.
EK: Fifty percent?
JT: The reason I say that is that if you listen to what the government and banks say they’ve modified, they’re looking at 3.5 million. If you accept those numbers, that’s about half of the six or seven million foreclosure filings we’ve seen. If we can help half of 11 million people, that’s a huge impact.
EK: And you don’t worry about an intervention like this freezing the market? Insofar as we're inching back to normalcy, that’s at least partly because markets are working normally. If I understand what you’re saying correctly, it’s that a moratorium makes sense not just due to paperwork problems but as a housing policy. But if the government freezes these contracts in order to open them up, that’ll be a whole new ballgame for everyone invested in, or connected with, these industries, both now and in the future.
JT: No, I don’t. We’re not out of the woods with this economy. We’re deep in the jungle. We’re still looking at twice as many foreclosures as we’ve already experienced, and if unemployment gets worse, those numbers will go higher. Unless this situation gets managed, properly, we’re going to continue to have foreclosures dragging down our economy. Things may be going well on Wall Street, but it’s really not going well on Main Street. If people think we’ve gotten through this, they’re really misguided.
This is beyond just the robo-signing and the paperwork. This is a continuing continuum of bad practices and fraudulent lending that got us into this situation. And yes, some of those institutions that did the worst of it are gone, but other institutions have purchased them -- and that means they purchased their responsibilities, too. These homeowners were thinking that the bank wouldn’t be making them a loan if they couldn’t pay it back. They were told interest rates were going down, that they could do this, and they believed it. The responsibility began with the lenders, and it still lies with them. Dodd-Frank actually had to legislate that you can’t make a loan to anyone who doesn’t have the ability to pay. The fact that we had to legislate that tells you how far our financial-services sector fell.
Photo credit: Jim R. Bounds.
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Fox <b>News</b> Fair And Balanced | MSNBC Political coverage | Mediaite
If one believes that the cable news landscape is symptomatic of our two-party political system, then one also probably and predictably saw a different tone in last nights election results. Fox News presented its coverage with a patina ...
Britain Orders Inquiry Into <b>News</b> Corp.'s BSkyB Bid - NYTimes.com
Vince Cable, the British business secretary, ordered the communications regulator Ofcom to conduct an inquiry into News Corp.'s bid to take over the satellite television company BSkyB.
Facebook "Unlike" Button Comes to the <b>News</b> Feed
Facebook quietly introduced an "Unlike Page" button into its News Feed recently, which allows users to opt-out of receiving unwanted messages from pages they had previously said they ...
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Fox <b>News</b> Fair And Balanced | MSNBC Political coverage | Mediaite
If one believes that the cable news landscape is symptomatic of our two-party political system, then one also probably and predictably saw a different tone in last nights election results. Fox News presented its coverage with a patina ...
Britain Orders Inquiry Into <b>News</b> Corp.'s BSkyB Bid - NYTimes.com
Vince Cable, the British business secretary, ordered the communications regulator Ofcom to conduct an inquiry into News Corp.'s bid to take over the satellite television company BSkyB.
Facebook "Unlike" Button Comes to the <b>News</b> Feed
Facebook quietly introduced an "Unlike Page" button into its News Feed recently, which allows users to opt-out of receiving unwanted messages from pages they had previously said they ...
bench craft company
We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.
User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.
John Taylor is president and chief executive of the National Community Reinvestment Coalition, and he's among those calling for a foreclosure moratorium -- and not just because the paperwork was awry. We spoke this afternoon.
Ezra Klein: Why do we need a foreclosure moratorium? What will we gain from it?
John Taylor: Foreclosures are the single biggest contributor to the undermining of the market. What we need to do is put a brake on foreclosures, not accelerate them. They’re the enemy of recovery. We need to manage them so that the mortgages that can be modified are.
EK: But won’t that just freeze the markets and throw everything into more chaos? And as for the homeowners, most of them will end up being foreclosed on anyway. We’ll have delayed the inevitable, adding uncertainty to economic pain.
JT: Those are people who don’t understand what’s happening in the crisis. The point of a moratorium is to give the counselors and the attorneys time to negotiate a fairer, more responsible mortgage product. Mortgages where properties have been abandoned and the banks are repossessing them should go forward. But in other cases, where people have just lost jobs, we can be more patient. Citibank has given those people six months to get back on their feet. That’s what we need, not greasing the skids of this process. People need to understand, every time there’s a foreclosure, if you’re near that house, your property value goes down.
EK: The property-value issue doesn’t get enough attention, I think. But in a new paper, Third Way argues it cuts in the other direction: Removing foreclosures from the equation makes it easier for people to strategically default, as they won’t get kicked out. That will lead to more defaults and thus lower property values.
JT: Bring me a live body. Where are these people waiting to jump into foreclosure? People are in foreclosure because they have no choice. There isn’t a group waiting to pounce on the foreclosure process.
EK: It doesn’t sound to me like you’re looking for a moratorium so much as loan modification. Why not just do that?
JT: They have to be coming hand-in-hand. The point of the moratorium is that it would force the lenders and servicers to the table and it would give those with expertise in working out these problems the time to come up with rational and reasonable solutions, like modifications and refinances.
EK: How long should this moratorium be?
JT: The government has to say, "Okay, there’ll be six to eight months, and after that, we’ll assess whether this is working." And working means that foreclosures where there’s no income or hope of income go into the pipeline and those with income get a responsible loan matching their ability to pay. And the government can say, "Look, lenders, if you want to be able to sell mortgages to the federal housing authority, if you want to use the federal funds window, work with us. We stabilized your industry, after all." And there’s of course more leverage from Fannie and Freddie.
EK: And if we did this, how many of the 11 million or so foreclosures can we expect to modify and prevent?
JT: I would say 50 percent.
EK: Fifty percent?
JT: The reason I say that is that if you listen to what the government and banks say they’ve modified, they’re looking at 3.5 million. If you accept those numbers, that’s about half of the six or seven million foreclosure filings we’ve seen. If we can help half of 11 million people, that’s a huge impact.
EK: And you don’t worry about an intervention like this freezing the market? Insofar as we're inching back to normalcy, that’s at least partly because markets are working normally. If I understand what you’re saying correctly, it’s that a moratorium makes sense not just due to paperwork problems but as a housing policy. But if the government freezes these contracts in order to open them up, that’ll be a whole new ballgame for everyone invested in, or connected with, these industries, both now and in the future.
JT: No, I don’t. We’re not out of the woods with this economy. We’re deep in the jungle. We’re still looking at twice as many foreclosures as we’ve already experienced, and if unemployment gets worse, those numbers will go higher. Unless this situation gets managed, properly, we’re going to continue to have foreclosures dragging down our economy. Things may be going well on Wall Street, but it’s really not going well on Main Street. If people think we’ve gotten through this, they’re really misguided.
This is beyond just the robo-signing and the paperwork. This is a continuing continuum of bad practices and fraudulent lending that got us into this situation. And yes, some of those institutions that did the worst of it are gone, but other institutions have purchased them -- and that means they purchased their responsibilities, too. These homeowners were thinking that the bank wouldn’t be making them a loan if they couldn’t pay it back. They were told interest rates were going down, that they could do this, and they believed it. The responsibility began with the lenders, and it still lies with them. Dodd-Frank actually had to legislate that you can’t make a loan to anyone who doesn’t have the ability to pay. The fact that we had to legislate that tells you how far our financial-services sector fell.
Photo credit: Jim R. Bounds.
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Fox <b>News</b> Fair And Balanced | MSNBC Political coverage | Mediaite
If one believes that the cable news landscape is symptomatic of our two-party political system, then one also probably and predictably saw a different tone in last nights election results. Fox News presented its coverage with a patina ...
Britain Orders Inquiry Into <b>News</b> Corp.'s BSkyB Bid - NYTimes.com
Vince Cable, the British business secretary, ordered the communications regulator Ofcom to conduct an inquiry into News Corp.'s bid to take over the satellite television company BSkyB.
Facebook "Unlike" Button Comes to the <b>News</b> Feed
Facebook quietly introduced an "Unlike Page" button into its News Feed recently, which allows users to opt-out of receiving unwanted messages from pages they had previously said they ...
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bench craft company
Fox <b>News</b> Fair And Balanced | MSNBC Political coverage | Mediaite
If one believes that the cable news landscape is symptomatic of our two-party political system, then one also probably and predictably saw a different tone in last nights election results. Fox News presented its coverage with a patina ...
Britain Orders Inquiry Into <b>News</b> Corp.'s BSkyB Bid - NYTimes.com
Vince Cable, the British business secretary, ordered the communications regulator Ofcom to conduct an inquiry into News Corp.'s bid to take over the satellite television company BSkyB.
Facebook "Unlike" Button Comes to the <b>News</b> Feed
Facebook quietly introduced an "Unlike Page" button into its News Feed recently, which allows users to opt-out of receiving unwanted messages from pages they had previously said they ...
bench craft company
Fox <b>News</b> Fair And Balanced | MSNBC Political coverage | Mediaite
If one believes that the cable news landscape is symptomatic of our two-party political system, then one also probably and predictably saw a different tone in last nights election results. Fox News presented its coverage with a patina ...
Britain Orders Inquiry Into <b>News</b> Corp.'s BSkyB Bid - NYTimes.com
Vince Cable, the British business secretary, ordered the communications regulator Ofcom to conduct an inquiry into News Corp.'s bid to take over the satellite television company BSkyB.
Facebook "Unlike" Button Comes to the <b>News</b> Feed
Facebook quietly introduced an "Unlike Page" button into its News Feed recently, which allows users to opt-out of receiving unwanted messages from pages they had previously said they ...
bench craft company
Fox <b>News</b> Fair And Balanced | MSNBC Political coverage | Mediaite
If one believes that the cable news landscape is symptomatic of our two-party political system, then one also probably and predictably saw a different tone in last nights election results. Fox News presented its coverage with a patina ...
Britain Orders Inquiry Into <b>News</b> Corp.'s BSkyB Bid - NYTimes.com
Vince Cable, the British business secretary, ordered the communications regulator Ofcom to conduct an inquiry into News Corp.'s bid to take over the satellite television company BSkyB.
Facebook "Unlike" Button Comes to the <b>News</b> Feed
Facebook quietly introduced an "Unlike Page" button into its News Feed recently, which allows users to opt-out of receiving unwanted messages from pages they had previously said they ...
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Fox <b>News</b> Fair And Balanced | MSNBC Political coverage | Mediaite
If one believes that the cable news landscape is symptomatic of our two-party political system, then one also probably and predictably saw a different tone in last nights election results. Fox News presented its coverage with a patina ...
Britain Orders Inquiry Into <b>News</b> Corp.'s BSkyB Bid - NYTimes.com
Vince Cable, the British business secretary, ordered the communications regulator Ofcom to conduct an inquiry into News Corp.'s bid to take over the satellite television company BSkyB.
Facebook "Unlike" Button Comes to the <b>News</b> Feed
Facebook quietly introduced an "Unlike Page" button into its News Feed recently, which allows users to opt-out of receiving unwanted messages from pages they had previously said they ...
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If you are in danger of facing foreclosure because you have defaulted on your monthly mortgage payments, you must act quickly before it's too late to negotiate a loan modification, and your home gets sold in a foreclosure auction. You may feel hopeless now, but there is still hope until that auction date arrives. Here are a few tips to help save your home from foreclosure.
- During foreclosure proceedings, do not move out of your house so that you can still claim benefits such as, one-time FHA mortgage insurance, etc.
- Mark your mortgage due date in red and prioritize you're most important financial obligations accordingly.
- Make a list of all your monthly payments. Your monthly mortgage payment must be on top of the list. Credit card bills, personal loans and other unsecured debts will have to suffer and go down the lists for the meantime while you catch up on your mortgage payments. Besides damaging your credit score, these debts will not bring greater consequences compared to loosing your home to foreclosure. The effects foreclosure has on your credit score are MUCH more severe anyway.
- Do not ignore nor wait for your banks foreclosure notice. Inform them beforehand that you are in a financial crisis because of a hardship. This act of good-faith could earn a bit of mercy from your lender. Provide necessary supporting loan modification documents for their assessment. In all likelihood, your lender might either extend the grace period or consider a forbearance agreement just as long as you make the effort to catch up with your mortgage payments.
- Seek the help of credit counseling and debt management program. You can repair you own credit by downloading our free credit repair kit. Take advantage of lenders and local housing agencies or extension services offering these programs especially if it's for free. The best venue to seek free financial and foreclosure help from is the U.S. Department of Housing and Urban Development (HUD), as there are lists of credit counseling and debt management agencies approved to work with HUD loans and possibly with your lender. In cases involving promissory notes or predatory lending, contact your bank directly.
- Consider the options to get affordable mortgage payments. It could be by restructuring or refinancing your mortgage loan. With the new Obama loan modification programs currently available, deciding what to choose would be easy depending on your financial capacity. Keep in mind that mortgage refinancing costs can be expensive because of the processing fees, such as closing costs and points.
- If you're successful in negotiating a lower monthly mortgage payment, get the resolution in writing. In fact, keep all loan modification documents that legally represent any agreement or arrangement with your lender
- If not, sell unnecessary assets. You can raise money by doing this and pay your mortgage until you recover from your financial hardship. It is also a good time to lower your monthly expenses. But doing both of these will not be enough in the long run if your financial situation is remains the same.
- You can sell your home to a third party as an alternative. This could be referred to as short sale. Sometimes creditors accept this as full settlement of the debt. Typically though, the selling value of the house cannot cover the outstanding loan balance, so some banks would rob you through foreclosure deficiency if you have too many assets. Get the help of housing counselor, real estate agent or a loan modification lawyer. You may also be able to re-purchase your property after the foreclosure auction.
- Negotiate a forbearance agreement. As much as you want to keep your house, is as much as the lenders want to get paid. In the case of forbearance, your lender will temporarily stop foreclosure proceedings until another payment option can be executed.
- Declare bankruptcy. This could put your credit record in a bad spot. Remember that you may or may not be able to keep your home with this option. If you seriously think that this is your only way out, call your attorney to discuss what to do.
- Turn-over your home to your lender. This is called "deed in lieu of foreclosure." This option will not affect your credit score but you will be rendered homeless. As you are making things easier for the lender, this act may just be recognized thru eliminating your loan balance even if the house sells less. Again, get the help of a mortgage attorney.
Be realistic in choosing your options because once an agreement is reached you must conform, otherwise you'll surely face another foreclosure. For more loan modification help feel free to download our Free Loan Modification Kit
The majority of mortgages are secured or funded by government programs such as HUD, FHA, or VA. If your mortgage belongs to any of these agencies, inquire about what options they offer to save your home. But you must approach your lender first to personally negotiate openly and honestly. In doing so you'll save paying credit counseling agencies or lawyers.
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