MBA Critical of Mortgage Rescue Plan

Washington, DC, Feb. 20, 2009--The Mortgage Bankers Association has criticized part of the mortgage rescue plan unveiled by President Barack Obama.

MBA CEO John A. Courson said he was encouraged that the overall effort will provide a variety of alternatives to help a wide array of borrowers avoid foreclosure. He said it provides crucial refinance opportunities to borrowers whose mortgages are held or guaranteed by Fannie Mae and Freddie Mac.  It also provides strong incentives for servicers and investors to offer sustainable loan modifications to borrowers who are already delinquent or foresee falling behind on their payments.

“Among the concerns we have is that it seems to offer little help to borrowers whose loan exceeds their property value by more than five percent.  This will limit the plan’s success in some of the hardest hit areas in California, Florida, Nevada and Arizona, as well as some areas on the East Coast.
 
“Another limiting factor of the plan is that it doesn’t offer assistance to borrowers with jumbo mortgages and those whose mortgages are in private label securities. It also doesn’t provide servicers with a sufficient safe harbor to avoid litigation from the investor or mortgage holder when the servicer is trying to help a borrower with a jumbo or non-agency mortgage.
 
Chairman David G. Kittle said he was disappointed that the plan endorses bankruptcy as a means to help struggling homeowners.

“Our fear is that any borrower who can’t be helped by this program will have a hard time being helped by bankruptcy."