Hey - it's all about improving the cash flow fundamentals of the real estate mbs (mortgage backed securities). Will these lower modificatione be enough to halt the tide of Alt-A and option ARM re-sets? Or higher rates of unemployment? Somehow, I still have my doubts.
PS: This news could also have sparked today's bond sell off. The govt destroying its credit rating is never good.
WASHINGTON (Dow Jones)--The Obama administration unveiled a fresh set of incentives Tuesday for mortgage servicers to help strapped U.S. homeowners.
Under a new program, the government will pay mortgage servicers $500 up front and $250 a year for three years for successfully modifying a second mortgage, such as a home equity loan.
Second mortgages have complicated government efforts to help borrowers avoid foreclosure. According to the U.S. Treasury Department, up to 50% of at-risk mortgages have second liens and many properties in foreclosure have more than one lien.
Senior administration officials Tuesday told reporters they expect a significant amount of big banks to sign up for the updated federal program to bring relief to troubled homeowners. Once those firms sign necessary contracts, they'll generally be obligated to modify second liens when they've initiated a modification on the first, the officials said. They also noted that the second lien program will be funded by the $50 billion in Troubled Asset Relief Program, or TARP, funds the administration had already projected to use for home affordability efforts.