Saturday, November 15, 2008

Sheila Bair Stole My Homework!

Well, not really. But that headline might get you out of your feedreader.


Sheila Bair is way smarter than me by any measuring stick you can think of. But this week Bair endorsed a loan workout program that's remarkably similar to a plan I proposed back in April.


Sheila: "The FDIC has initiated a systematic loan modification program at IndyMac Federal Bank to reduce first lien mortgage payments to as low as 31% of monthly income. Modifications are based on interest rate reductions, extension of terms, and principal forbearance. A loss share guarantee on redefaults of modified mortgages can provide the necessary incentive to modify mortgages on a sufficient scale, while leveraging available government funds to affect more mortgages than outright purchases of specific incentives for every modification." (emphasis mine)


Me:


"...lenders [should] do the following: (1) write down principal, (2) lower interest rates and use fixed (not adjustable) rates, (3) lengthen loan terms, and (4) use the homeowners’ credit score from before they missed their first mortgage payment to calculate the refinance terms."


and me in September 2007:  Why is the 30 Year Mortgage Sacrosanct?



So Sheila, anytime you need to bounce some ideas around, gimme a call. 'Kay?