Good News: In what will rank as the largest predatory-lending settlement in history, an estimated 125,000 Californians may get their Countrywide loans modified and payments reduced under a program to be announced today. The program is expected to save billions for homeowners.
Bad News: The program, however, rests on the assumption that investors in mortgage securities cooperate with the loan workouts. There is no indication, yet, that this will happen.
This is one of the problems of the $700 billion bailout. While the securities market gets the American tax-payer to subsidize the value of their products, there is no provision to compel the mortgage security industry to cooperate with programs like these.
I'll discuss this in more detail on Saturday.
- Mark
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