Take Stimulus Money - Can't adjust and/or Foreclose?

Question

I've been out of the loop more than I thought but just talked to a developer and heard of this where banks that take stimulus money can't follow through on foreclosure and/or adjusting up ARMs?  Anyone hear anything about that?  Anybody have any more info on that?  This is really going to screw with the foreclosure market if it is the case....

Jim Wineinger · Answer

TIM, here is a reprint of the actual discussion log of the law that was to be passed as far as I coul tell for what you were asking for. Happy reading

Secretaryâ€™s authority as investor to encourage the servicers of the underlying mortgages, using net present value analysis, to take advantage of the Hope for Home
owners Program under section 257 of the National Housing Act or other available programs to minimize foreclosures.

(c) CONSENT TO REASONABLE LOAN MODIFICATION REQUESTS.â€”For residential mortgages underlying
troubled assets purchased under this Act, the Secretary shall request loan servicers servicing the mortgage loans
to avoid preventable foreclosures, to the greatest extent possible, to the extent that the Secretary, as an investor, has discretion to do so under existing investment contracts. Upon any request arising under existing investment contracts, the Secretary shall consent, where appropriate, to reasonable requests for loss mitigation measures, including term extensions, rate reductions, principal write downs, increases in the proportion of loans within a trust or other structure allowed to be modified, or removal of other limitation on modifications.

SEC. 26. DEFINITIONS.
 For purposes of this Act, the following definitions shall apply:
(1) FINANCIAL INSTITUTION.â€”The term â€˜â€˜financial institutionsâ€™â€™ means any institution including, but not limited to, banks, savings associations, credit unions, broker-dealers, and insurance companies organized and regulated under the laws of the United States or any State, territory, or possession
of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Marianas Islands, Guam, American Samoa, or the United States Virgin Islands, and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.

(2) SECRETARY.
The term â€˜â€˜Secretaryâ€™â€™ means the Secretary of the Treasury.

(3) TROUBLED ASSETS.
The term â€˜â€˜troubled assetsâ€™â€™ means residential or commercial mortgages
and any securities, obligations, or other instruments that are based on or related to such mortgages, that
in each case was originated or issued on or before September 17, 2008, the purchase of which the Secretary determines promotes financial market stability; and, upon the determination of the Secretary in consultation with the Chairman of the Board of Governors of the Federal Reserve, any other financial instrument, the purchase of which the Secretary determines necessary to promote financial market
stability.

Jim Wineinger · Answer

There was something like that on the news a while back, but do not know if it was just being proposed or was just a "guideline". But instead of saddeling the banks with these there was a plan for the government to step in  and "purchase" those non performing loans so that the banks would have more money available to them for future loans.

Maybe that means that there will be more properties available at "governmental auctions"?