BANGKOK, February 20 2012 -- Gooood morning Thailand! Or is it good night San Diego? In any event, this vacation/business trip has proved to be quite an experience. As beautiful and enchanting as it is in much of SE Asia, seeing the third world up close and personal, off the beaten path of tourist spots, has made me realize once again how good we have it in the ole' U.S. of A, even during some of the worst of times. And while there has been a lot of good news to smile about in terms of jobs data and its implications on Housing in our great country, it may just be that more is coming, at least for past and present distressed homeowners stuck in challenging mortgages. But then again...
Last week, the "big five" mortgage servicers struck an accord with a host of federal agencies and state attorney generals on a $25 billion settlement effected to serve distressed mortgagors, and prevent similar circumstances from happening again. The big five include the usual suspects: Wells Fargo & Company, Citigroup, Inc., JP Morgan Chase & Co., Bank of America Corporation (think Countrywide), and Ally Financial, Inc. (think GMAC). These five fine (heaping dose of of sarcasm) institutions service almost a whopping 60% of ALL mortgages in the United States!
So what kind of haircut did the big, bad banks (ooooops, I mean good "servicers") agree to (somehow "agree" doesn't seem like the right word) over lunch in this landmark deal with the states and feds? For appetizers, they agreed to a $3 billion refi program for mortgagors that are upside down. Then, over salad, they agreed to fork over $5 billion to the various aforementioned coalition of State and feds. And for the main course?? A "minimum" of $17 billion to go directly to upside-down mortgagors, mostly in the form of principal reduction. For dessert, a host of new regs and unprecedented rights to future mortgagors to sue in civil court and pursue individual, institutional, and/or class action cases regardless of mortgage agreement. And then the bill came... Remember that aforementioned "minimum" of $17 million to be doled out? Well, that's going to look more like $32 million.
Now, after all is said and done, and we all get back to work after lunch, what does it all mean? It certainly sounds good, right? It certainly is getting interesting, right? But is there any reason to believe that the "servicers" will do any of the things that they say they agree to? Haven't we seen this movie somewhere before? Was anyone around for the last big bailout? It seems... so long ago. No, wait a minute, it wasn't. It was just a few years ago, just yesterday in the grand scheme of the collapse. Maybe this "agreement" with law enforcement authorities will disable the army of attorneys that will surely again be retained by the big 5 banks (sorry, I meant "servicers") to effect said servicers escaping doing what it is that they agreed to do. If not, it's simply more hot air, and a big bureaucracy that helps little to no one. We could call it Servicers II: "Attack of the Big Bank Clones." Or we could call it HARP II: The..." Alright, alright, enough already. I'll pick on HARP next week.
In the meantime, contact me, Jason Bernabei, at jasonb@tricastle.com, and check me out each and every Monday on www.therealtyinsiders.com for more, and be sure to tune in to SD6-CW to see myself and co-host Greg Phillips on “The Realty Insiders” real estate show, THE ONLY real estate show in town! Ok, I'm headed for a guided tour through the Siamese jungle by elephant. Until next time San Diego, happy housing!
Jay's Outlook: dark n stormy
Jason Bernabei, TriCastle Realty
