Obama Wants Bailed Out Banks to Modify Loans But Banks Don’t Want Play

President Obama presented a plan shortly after taking office to keep Americans in their homes by giving banks the taxpayers’ money in order for the bailed out banks to rework loans so mortgage payments can be reduced. But the banks have failed to do that as they have failed at everything else for the American economy and its people.

How long will Americans wait for results as jobless rates rise to an high since 1983 and more people lose their homes?  Take this poll:  http://www.misterpoll.com/polls/427966

Loan modifications rise; many don’t pare payments
Foreclosure prevention efforts grow, but fewer than half of loan modifications reduce payments

  • Friday April 3, 2009, 10:10 am EDT

WASHINGTON (AP) — Lenders are boosting their attempts to avoid home foreclosures, but fewer than half of loan modifications made at the end of last year actually reduced borrowers’ payments by more than 10 percent, data released Friday show.

The report, based on an analysis of nearly 35 million loans worth more than $6 trillion, was published by the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision. It provides the most detailed and broad analysis to date of efforts to stem the foreclosure crisis.

Among loan modifications made in the October-December quarter, about 37 percent resulted in a drop in payments of more than 10 percent, compared with about one-fourth in the first nine months of the year. Regulators saw that growth as a positive sign.

“The trend toward lowering payments to make home mortgages more affordable is moving in the right direction,” John Bowman, acting director of the Office of Thrift Supervision, said in a prepared statement.

Still, nearly one in four loan modifications in the fourth quarter actually resulted in increased monthly payments. That situation can happen when lenders add fees or past-due interest to a loan and spread those payments out over the 30- or 40-year period.

Perhaps unsurprisingly, the report found that loans were far less likely to fall back into default if a borrower’s monthly payment is reduced by a healthy amount.

Nine months after modification, about 26 percent of loans in which payments had dropped by 10 percent or more had fallen back into default. That compares with about half of loans in which the payment was unchanged or increased.

“This new data shows that, in the current stressful environment, modification strategies that result in unchanged or increased mortgage payments run the risk of unacceptably high re-default rates,” Comptroller of the Currency John Dugan said in a statement.

The Obama administration is aiming to help up to 9 million borrowers stay in their homes through refinanced mortgages or modified loans. It is spending $75 billion to provide lenders an incentive to alter more loans.

Still, the faltering economy, driven down by the collapse of the housing bubble, is causing the housing crisis to spread.

Among the loans surveyed in the report, just over 10 percent were delinquent or in foreclosure, compared with 7 percent at the end of September, the report said. Delinquencies are increasing the most among prime loans made to borrowers with strong credit, it said.


U.S. Economy: Jobless Claims Climb to Highest Level Since 1982

Despite President Obama and his administration along with Fed Chairman Ben Bernanke desperate efforts to re-inflate the economy through tens of trillions of taxpayers’ money, jobless rates continue to rise adding to the total number of unemployed Americans.

When will we see real results to all this massive spending?  Banks continue to hold back on lending while more people go unemployed and risk losing their homes and other assets.

U.S. Economy: Jobless Claims Climb to Highest Level Since 1982

By Shobhana Chandra

April 2 (Bloomberg) — The number of Americans seeking jobless benefits last week climbed to the highest level in 26 years, providing a reminder that unemployment will keep mounting long after the economy stabilizes.

Initial jobless claims swelled by 12,000 to 669,000 in the week ended March 28, the most since 1982, the Labor Department said today in Washington. A Commerce Department report showed orders to factories improved in February for the first time in seven months…[FULL STORY]


G-20 to give $1 trillion to IMF, World Bank, will more closely regulate financial system

President Obama and Treasury Tim Geithner clearly had an agenda of attempting to get G-20 nations to spend more stimulus within G-20 nations’ borders.  However, getting some early feedbacks from the G-20 representatives, President Obama and his cabinet decided to drop their initial targets for other nations.   What does the leading nations know that President Obama and Treasury Secretary don’t know?

President Obama, despite having dropped their targets for the G-20, they still persisted on urging the other leaders to spend to jump start the world economy that “knows no borders”.  But the Europeans are resisting such urgings saying they have done all that they can and cannot do more without jeopardizing their budgets.

In response to U.S. calls for more government spending, the EU has said it is doing its part with a package that amounts to between 3 and 4 percent of Europe’s gross domestic product. The $780 billion amounts to about 5.5 percent of the U.S. GDP, but is spread over two years.

While the U.S. is expected to continue to urge European countries to spend more, that will likely be a tough sell. With the exception of Germany, Great Britain and France, most European governments’ finances are already stretched to the limit.

However, despite a laundry lists of things to follow up on, the G-20 nations did agree to further expand the lending powers of the IMF to help the poors of the developing nations to ride through this world wide economic meltdown.

They also unveiled a $250 billion expansion in the IMF’s reserve currency — the special drawing right — to boost liquidity in the global financial system by expanding member countries’ foreign exchange reserves. They committed to selling IMF gold to help poor countries..

G-20 to give $1 trillion to IMF, World Bank

LONDON (AP) — G-20 leaders pledged an additional $1 trillion to restore credit, growth and jobs in the world economy on Thursday, announcing a broad raft of measures designed to hasten the end of the global financial crisis.

The leaders also declared a crackdown on tax havens, regulation of hedge funds and a new supervisory body to flag problems in the world financial system.

“Today the largest countries of the world have agreed on a global plan for economic recovery and reform,” said the host, British Prime Minister Gordon Brown.

A sweeping G-20 communique appeared to bridge the gap between the United States and major European countries over how far to push changes on regulation to curb the market excesses that led to the current crisis.

The result of the dramatic one-day gathering was swiftly praised by German Chancellor Angela Merkel and French President Nicolas Sarkozy.

Sarkozy praised President Barack Obama and Brown at the end of the meeting, despite having threatened earlier to walk out if unsatisfied with the outcome. The French leader said Obama helped in creating consensus and in persuading China to agree to publish lists of tax havens.

Sarkozy said Obama was a “very open man” and “completely in line with what we wanted: that politicians take their responsibilities.”

European and U.S. markets surged ahead Thursday as the outcome of the summit came into view.

While they did not announce any new stimulus measures — as some in the United States had hoped — Brown said the $1 trillion deal to boost funds for the International Monetary Fund, World Bank and other global institutions was unprecedented.

“For the first time we have a common approach to cleaning up banks around the world to restructuring of the world financial system. We have maintained our commitment to help the world’s poorest,” Brown said. “This is a collective action of people around the world working at their best.”

The G-20 leaders also said that developing nations — hard-hit and long complaining of marginalization — a greater say in world economic affairs. They said they would renounce protectionism and pledged $250 billion in trade finance over the next two years — a key measure to help struggling developing countries.

The leaders also agreed to new rules on linking executive pay to performance, Brown said.


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