The article below gives a summary of the various groups and their efforts to help out homewoners with their mortgages. The question that is never asked in any of these articles is if you bought a reasonably priced house and made all the payments as expected (in other words you did what you agreed to do) what do you get out of this other than paying for other people's mistakes. Text in bold is my emphasis. From the WSJ:
Fannie Mae and Freddie Mac, which are under government control, said they would help streamline the modification of loans for potentially hundreds of thousands of homeowners who are 90 days or more behind on their mortgage payments.
The Bush administration said it would use the mortgage giants to extend aid to struggling homeowners, a move met with criticism from a top federal regulator, lawmakers and others, who charged it doesn't do enough to stem home foreclosures.
The response intensifies an already fraught debate over the government's approach to the mortgage crisis, which has cast a long shadow over the U.S. economy, from restaurants to auto makers to retail stores.
The Federal Deposit Insurance Corp. and some lawmakers support using part of the government's $700 billion in bailout funds to spur much broader loan modifications. So far, the Treasury and White House have resisted and questioned whether that idea would be effective given the costs to taxpayers.
The potential reach of the program is constrained by the large number of mortgages, especially subprime, which have been bundled into packages of securities and sold to investors around the world. The practical and contractual complexities surrounding these securities renders the mortgages hard to change.
The voluntary plan, which officials hope will be adapted by other mortgage holders, would enable certain borrowers to receive more affordable loans that would make their mortgage payments at most 38% of their monthly income.
James Lockhart, director of the Federal Housing Finance Agency, which controls Fannie and Freddie, called the plan "a bold attempt to move quickly in defining a nationwide program that can quickly and easily reach many of these troubled borrowers." Mortgage servicers would be paid $800 for every loan they modify.
Fannie Mae's and Freddie Mac's participation could make the program standard practice for other loan servicers. To qualify, borrowers must live in their homes, not be in bankruptcy proceedings and have to owe at least 90% of the value of their home.
FDIC Chairman Sheila Bair questioned the plan's effectiveness, saying it "falls short of what is needed to achieve widescale modifications of distressed mortgages." Ms. Bair, a Republican White House appointee, said the government should use some portion of the financial-market bailout package to reduce foreclosures.
The government's move is the latest attempt from Washington and Wall Street to modify mortgages en masse. Led by Bank of America Corp., J.P. Morgan Chase & Co. and Citigroup Inc., the banking industry has announced measures to make loans more affordable. Citi said Tuesday it would modify terms on as much as $20 billion in mortgages for borrowers who are current on their loan payments but could fall behind.
Driving this movement is the increasing cost of foreclosures to investors as home prices continue to plummet. LPS Applied Analytics estimates that losses from foreclosures are averaging about 44% of the loan amount, up from about 29% a year ago.
Given the scope of the crisis, working with borrowers "case by case doesn't work," says Mary Coffin, head of loan servicing for Wells Fargo Home Mortgage. "It probably hasn't for several months."
House Financial Services Committee Chairman Barney Frank (D., Mass.) said he wants to rewrite rules that servicers say make it hard for them to modify loans. Rep. Mel Watt (D., N.C.) said Democrats planned to push for a 90-day moratorium on foreclosures. President-elect Barack Obama has suggested that any bank receiving money from the government as part of the rescue package should temporarily halt foreclosures.
Congress passed a housing-rescue package in July and its central plank, a program known as Hope for Homeowners, went into effect Oct. 1. It allows banks to move borrowers into government-insured loans if lenders agree to write down a portion of the principal. The program was supposed to improve upon an earlier effort, called Hope Now.
Hope for Homeowners was expected to help as many as 400,000 people, but in its first two weeks it helped just 42 homeowners, according to agency records. The U.S. Department of Housing and Urban Development estimated earlier this month the plan could help 19,600 people by the end of 2009. An agency spokesman said it was too early to judge the program because it takes time for loans to be processed.
"The problem is we've used so many incremental steps, none of which have been big enough to get ahead of the problem," said Sen. Mel Martinez (R., Fla.), a supporter of Ms. Bair and former secretary of the Housing and Urban Development.
In a sign of continuing woes, luxury home builder Toll Brothers Inc. Tuesday reported sales hit record lows last month. Robert Toll, the company's chief executive, said the financial turmoil sparked a wave of cancellations. Fears of jobs losses and the plummeting stock market drove "home buyers' confidence and our traffic and demand down to record lows." Mr. Toll said.
Bush administration officials said the effort announced Tuesday doesn't preclude other foreclosure-prevention measures. It remains unclear what other steps might be taken.
Several weeks ago, Ms. Bair began privately floating a proposal that would use roughly $40 billion from Treasury's $700 billion program to help roughly three million homeowners move into more affordable loans. The White House has been cool to the idea. Bush administration officials have said the FDIC's proposal could offer perverse incentives that might push more people into foreclosure, such as encouraging people whose mortgages were underwater to stop making monthly payments in order to qualify for aid.
The Treasury Department has so far directed its rescue spending into financial institutions, and isn't currently expected to buy distressed assets such as mortgages.
Few believe even the giant loan-modification efforts announced by financial institutions will be enough. That's because the programs focus primarily on mortgages wholly owned by the participating institutions. Most mortgages in recent years were sold to investors, and efforts to modify those are proving to be vexing, particularly when those loans have been carved into mortgage-backed securities that don't carry some government guarantee.
Of the $11.3 trillion in mortgage loans outstanding, $2.03 trillion were packaged into mortgage-backed securities sold to investors by Wall Street, according to Inside Mortgage Finance. Another $4.5 trillion are owned or guaranteed by Fannie Mae or Freddie Mac.