Yesterday, President Obama signed the Helping Families Save Their Homes Act into law.  What a relief!

There are two main features to this law:

First, it protects renters.  Renters have been one of the groups getting the collateral damage from the foreclosure crisis.  When an investor owner can’t pay his mortgage, he has to turn the home over.  In most cases, that means that the renters need to move on, as well.

Second, it includes a disclosure rule that requires companies buying mortgages on the secondary market to inform borrowers about who now owns their mortgage.

I have talked with so many people who are not sure who owns their mortgage.  I would say that this is a hard thing to understand.  I have tried to explain it numerous reporters.  Many are confused by the idea of a service and an investor on top of an original lender, possibly working with a wholesaler through a mortgage broker.

Definitely my broadcast news reporters couldn’t grasp it.

There are some other good features, too: a two percent cap on origination fees, and a “net tangible benefit” to borrowers during a refinancing.

The ABA and their bankers are a hard group to bargain with.  They have a lot of friends, particularly on the Financial Services Committee.  So, in a way, getting any kind of new law is great.  That said, this law is sort of misleading, because it does not come with the appropriate penalties for financial institutions who break its terms.

That’s because “curing” the problem does not require a systemic fix, but only a solution for the particular borrower.

Obama’s new budget contained an unexpected wrinkle.  As written, the President’s plan intends to shelve the guaranteed student loan program.  In its place, students would apply for loans directly to the US Department of Education.

The announcement came after markets closed on Thursday.

This sets up a battle between lobbyists for some of the top for-profit names in education (Sallie Mae, Apollo/University of Phoenix, and First Marblehead against the Democrats.

Students generally can get a better deal through the US Department of Education.  In spite of that opportunity, students still went to private loans because rising tuition often outpaced available grants and US Ed loan funds.

Obama believes that the new proposal would save taxpayers approximately $4 billion per year.

The National Community Reinvestment Coalition has finished an initial analysis of President Obama’s new foreclosure plan, the Homeowner Affordability and Stability Plan.  In an email sent to members, John Taylor, President of NCRC, acknowledged that while the plan advances “the cause”, that it still “falls short of what we hoped to see.”

Specifically, Taylor indicates that his organization, and others, had been hoping for a better carrot.  They propose a $4,500 incentive for lenders that agree to modify loans.   The incentive would be paid out over a period of three years.

NCRC has a larger explication of its foreclosure relief plan, entitled the Homeowners Emergency Loan Program (HELP!).  It (more…)

President Obama has signed legislation that will impact our nation’s foreclosure crisis.  It is not a moment too soon, and it remains to be seen if this is enough action, but at least we finally have policies that are designed to work directly on the root problems that are undermining our economy.

Obama’s plan, the Homeowner Affordability and Stability Plan (pdf here), will be announced in Phoenix later this morning. It has some great elements.  The plan will let homeowners refinance their mortgages, which Obama believes will save a (more…)

There are competing visions among leaders on how to execute a stimulus plan.  They differ, not just in size but also in the classes of households or activities that they should support. 

Obama’s administration has initially suggested that the 2009 stimulus could be a place to dovetail job creation with a means for shoring up our nation’s deteriorating infrastructure.  (more…)