The “stick” I refer to would have to very threatening indeed. It would have to come from the highest regulatory authorities in the country. It would have to have real teeth in it. It might read like the following (plain language):
From:
Board of Governors of the Federal Reserve System
Consumer Financial Protection Bureau
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency
To:
All Banks and Mortgage Servicers
.
As of today there is a new deal.
If a mortgagor approaches you with a request for mortgage forbearance AND this person has proof of employment outside of his/her current location we are telling you to resolve the problem ASAP.
Mortgage servicers have a variety of tools at their disposal to address underwater borrowers. These options include the Making Home Affordable Program and programs offered by or through Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the Department of Agriculture-Rural Development (USDA-RD). Use these programs to mitigate loss.
Banks and investors may take losses as a result of this order. We don’t care. If the borrower has a liquid net worth under $25,000 we’re telling you to eat the loss.
If the borrower seeking relief has a second mortgage or HELOC, write it off. Don’t you dare deny a borrower forbearance on a second lien. We will eat you alive if you try.
You have 15 business days to wrap this up. No delays will be permitted. If you delay the process, and the individual loses the job offer, we will hold you liable. We have lawyers itching to bust one of you.
If you do reject a request for mortgage relief from an individual who has a job in another location, you have to report the details to us, and you must explain why you did not play ball.
We will be looking at this with a fine-toothed comb. The first ten of you that we catch screwing this up are going to get the book thrown at you. We will make your life miserable. We will sue you. We will fine you. We will take away your license to operate.
If you $uck with this order, we will $uck with you. We don’t care how big you are. We will take you down. We have the power and we will use it.
Okay. Do you like it? I hope you do. I had fun writing it. Please don’t think that I had anything to do with coming up with this idea or the use of a regulatory threat to achieve the desired results. I just copied it, (in spirit) nearly word for word, from the same government Agencies that I mentioned above . It was released today. Here’s the cover page and the LINK:
http://www.zerohedge.com/contributed/2012-06-21/good-plan-gone-wasted?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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