 |
| 30 Yr Fix |
6.63% |
0.37% |
| 15 Yr Fix |
6.18% |
0.40% |
| 1 Yr ARM |
5.49% |
0.39% |
| 5/1 ARM |
6.16% |
0.36% |
| 30 Yr Tres |
4.70% |
0.04% |
| Fed Prime |
5.00% |
-0.25% |
|
|
|
|
 |
Free Subscription To News Alerts
Stay up to date on breaking news with our free News
Alert Service. |
|
|
Senate Moves To Assist Homeowners On Two Fronts
6301
Views - Printer Friendly - Email
This Story To A Friend
The Senate Banking Committee and one of its subcommittees dealt this week,
however superficially, with two issues that should be of interest to
a lot of homeowners. Hopefully these won't be problems that they have
just teed up and then punted into obscurity. Both are worthy of discussion if
not action.
Chris Dodd, Chairman of the Senate Committee on Banking, Housing, and Urban
Affairs and Charles Schumer, Chairman of the Joint Economic Committee both made
statements on April 11. Dodd was concerned with homeowners' insurance
issues, especially on the gulf coast but certain to not be limited to that area
while Schumer was seeking relief for homeowners in the midst of the subprime
mess.
Senator Dodd, in an opening statement before a hearing on "Availability
and Affordability of Property and Casualty Insurance in the Gulf Coast and Other
Coastal Regions" expressed concern that insurance coverage is becoming
increasingly difficult to obtain or afford in many coastal areas. Insurers,
he said, are pulling out of high-risk areas and others are dropping coverage
such as for windstorm damage. Even where coverage is available, rates and deductions
are rising to the brink of unaffordable.
Dodd, quoting from a Chicago Tribune article told of a funeral home owner along
Mississippi's Gulf Coast who saw his pre-Katrina insurance premiums of
$61,224 for $7 million in coverage skyrocket post-storm to $781,000. Unable
to handle that amount he reduced his coverage to $2 million for which he is
paying $122,113 each year. He also referred to a Palm Beach Post news story
about a local resident who opened her windstorm insurance renewal notice to
find that her premium has increased by 194 percent to $7,443.
Citing the numerous hurricanes along the Gulf and Atlantic Coasts, the Northridge
earthquake, wildfires throughout the west, and the North Dakota Red River floods,
Dodd said that the lack of affordable insurance is increasingly
a problem for homeowners throughout the country. Many states, he said, have
attempted to address the problem by, for example, setting up high risk pools
but the states cannot be expected to handle the problem on their own. Instead
this is a problem deserving of national solutions which must be crafted to make
sure that Americans have access to affordable insurance but that taxpayers are
not burdened by "the risk of losses that are properly borne by insurers and
re-insurers."
The Senator proposed four steps that Congress and the Administration should
take to provide relief for homeowners and businesses in the coastal areas of
the nation.
- Tax deductions should be provided for homeowners for insurance premiums
in areas where those premiums have seen significant increases. Deductions should
be available to working and middle income families and be capped individually
and also nationally so as not to exceed $100 million each year.
- The country should increase investment in mitigation activities above
the $100 million currently provided by FEMA to help communities to address the
risk of loss to their residents. Mitigation funding should at least double so
that homeowners can strengthen their homes and communities or relocate to higher
ground.
- The National Flood Insurance Program should be strengthened and put
on strong financial footing. This federal program is now $20 billion in debt
to the U.S. Treasury.
- Additional information should be gathered to aid in the consideration
of longer-term solutions.
Dodd's remarks did not include any comment on the thousands of homeowners
whose claims have been rejected by insurance companies, particularly where those
claims include hurricane damage.
Senator Schumer released a congressional study about the current
problems in the subprime lending industry. The report by the
Joint Economic Committee said that foreclosures in the subprime sector are expected
to rise over the next two years as nearly 2 million hybrid adjustable rate mortgages
hit their reset dates.
Schumer said that he and others would be proposing that "hundreds of
millions of dollars" of federal funds would be directed to helping community-based
groups work with borrowers to avert foreclosures. The report also urged that
underwriting rules be strengthened on the federal level and that standards for
the education and licensing of mortgage lenders be established.
It will be interesting to see if any congressional action arises out of these
reports and hearings and, should any occur, if it will be in the form of bailing
out insurance companies and lenders or putting in place some real reforms to
insure that corporations can not longer just take the money and run.
Related Tags
Select a Tag for more information related to that Tag. (View
All Tags)
foreclosures
|
Comments (10)
| Lenders earn fees on homes in foreclosure. All of these expenses are added onto the loan balance.The only time they lose money is when the become too agressive with their equity stripping programs. Should tax payers eliminate the downside risk? |
|
| Above Posted By:
Reality
| Wed, 18 Apr 2007 13:23:55 EST |
On Insurance, I don't even want to get started there. There is a reason insurance is higher in disaster prone areas, because of the disasters (common sense once again). You live in a flood zone, tornado alley or a coastal area prone to typhoons and hurricanes and expect your fellow citizens to subsidize you? If you decide to move to Mars should we insure that as well?
They should teach this stuff in high school, but I digress. Wake up, smell the coffee (no lattes please), the American dream will always be just that if you think you will get something for nothing. |
|
| Above Posted By:
Publius
| Tue, 17 Apr 2007 10:11:41 EST |
Lenders are also to blame. Their greed fueled the makeup of these loan products to begin with. If there is $$ to be made Wall St. will create a market for it, so they did (and still do). The 'sheeple' (sheep-people) have memories only as long as the front page of the newspaper or whatever drivel is fed to them nightly by the "Couric-esquians". Offering the under qualified and over extended false hope is hardly anything to be commended on. Unfortunatley, the 'sheeple' followed the herdsman.
We went through this same sub-prime tightening in the late 90's after similar loose underwriting and 125 LTV products were introduced. It was said previously that "On the bright side, nowhere in history have we had this much increased home ownership." Have you stopped to think that the reason more people didn't own a home was because they couldn't afford one in the 1st place? |
|
| Above Posted By:
Publius
| Tue, 17 Apr 2007 10:08:34 EST |
| Pandering will not solve the problem. Homeowners need to become educated and exercise basic common sense. You cannot afford a home if you falsely 'state' your income is higher, the loan still needs to be repaid! You have an OptionArm that allows you to afford a home well beyond your means because of the intro rate? The reset rates were not expected to go this high you say? But you knew it was a possibility! You dug the hole, don't expect the erudite to bail you out with their tax dollars. |
|
| Above Posted By:
Publius
| Tue, 17 Apr 2007 09:56:59 EST |
| Do not waste my tax money on bailing out fat cats(insurance industry) and greedy investors! As for the lenders, if you create a program to lure unqualified borrower then take the loss and don't complain. The working stiffs like me is the real victim. It seems that we have lost accoutability and integrity along the way. Stop the congress play politics and do some real jobs. We should stop free hand out. Isn't there a saying that " there is no free lunch in American"? |
|
| Above Posted By:
Anonymous
| Mon, 16 Apr 2007 16:19:45 EST |
| Lets take this opportunity to allow people to learn, readjust to new financial issues, and take care of themselves through counceling and payment deferral programs should they want the opportunity to do so. |
|
| Above Posted By:
Anonymous
| Mon, 16 Apr 2007 13:17:38 EST |
| Markets have cycles. There are peak cycles and low cycles in every industry in the economy. Reset rates were not predicted to go this high. Homeownership is a right for any American that wants to own. I encourage it for the long-term and short term. Allowing people to hold RE to obtain equity on the long haul for retirement is one reason. Takes some of the burden off of government. On the bright side, nowhere in history have we had this much increased home ownership. |
|
| Above Posted By:
Anonymous
| Mon, 16 Apr 2007 13:17:17 EST |
| Loan programs have been created to the max to falsely extend the housing market that has been trying to slow down on its own for sometime now. What do you expect from no money down, 55% back ratio, 25% overvalued appraisal loans? When the market slows to a crawl perhaps there will be a subsidy or supplemental program for me and my industry peers? I get a feeling the answer is NO! |
|
| Above Posted By:
Are you kidding?
| Mon, 16 Apr 2007 13:11:06 EST |
| Right! Wake upvoters indeed. Congress is nothing more than a den of thieves pandering to whomever will get them re-elected. Review the history and why corporate bailouts have continued. (i.e. Chrysler, Lee Iacocca) Our currency is worthless ink on paper and our laws are confiscatory. They'll transfer your wealth while you sleep. |
|
| Above Posted By:
amika
| Mon, 16 Apr 2007 12:57:23 EST |
| Congress is not only bailing out the homeowners who deserve to lose their homes since they took extreme risks (and fraud) to live above their means. This is a bailout for the predatory lenders who made it so easy for greedy people to get in this mess. Not on my tax dollar!!!!!
I am a realtor and have been shaking my head for almost 3 years. This was inevitable. A bailout will punish people who live within their means and reward the greedy. Wake up voters! |
|
| Above Posted By:
Sick and tired
| Mon, 16 Apr 2007 10:47:30 EST |
Post A Comment
Please fill out the form below to submit a comment.
|
 |
|
The rabbit hole may go deeper, or as I would rather think of it, 'closer to the top', but the real problem is the greedy, get-rich...
Read
|
Throwing more laws at the problem a only a bandage for a gushing wound. I am a Florida lawyer working with more and more people ev...
Read
|
Pointing fingers, throwing blame is NOT going to solve this mortgage mess. Until ALL companies are regulated and required to adher...
Read
|
|