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Response to "New Workout Plan for High Risk Loans by Freddie Mac"

New Workout Plan for High Risk Loans by Freddie Mac

As I have been saying for some time... a person with good credit cannot take preventive action to forestall delinquency and retain a sound credit rating... Yesterday, during the House Finance Committee testimony, Rep. Waters had the temerity to damn the CEO's of the banks for requiring a minimum 60 day delinquency when seeking mortgage relief when the government's own agencies, HUD, FHA, Fannie and Freddie, are committing the same offense... he who has the gold makes the rules!!! She was dead on in her condemnation of the banks for the implementing universal default with their credit cards... doesn't suppose that anyone noticed that the use of Universal Default closely coincided with the first round of sub-prime rate adjustments...

Business takes preventive action when it senses a turn down... cuts expenses... lays off people... works with its banks to prepare for the "storm"... A person owns a house... but lives in a home... the house is the business... but if a homeowner, current on his loan, approaches his lender in the same manner as any business for a modification of the exact same loan balance owed... only a change in rate and term... the pat answer is NO... must be that all loan servicing is handled by Capital One!!

The crazy part is, the loan is a performing asset... and by modifying the loan, the lender is better assured that this loan will remain current, the home owner, whose home is "underwater" and is willing to ride it out with no effect on the banks loan loss reserve requirements!!!

"...Under the new pilot, a selected portfolio of higher risk mortgages that are at least 60 days delinquent will be given to a specialty service for intensive attention using the full range of Freddie Mac workout opportunities, including the Streamlined Modification Program developed with the Federal Housing Finance Agency, Fannie Mae and the HOPE Now Alliance...."

A 60 day delinquency on a real estate loan will have the effect of lowering a credit score by no less than 150 points...consumers will require decent credit to drive the economy... yet congress, HUD, the Treasury and the banks demand that a person first harm their rating... they simply can't see the forest for the trees was never more true...

Stan Brody
United States Mortgage Corporation
Stan@USMCor.com