Mortgage Investors Stand United in Support of Hope for Homeowners

Non-bank Investors in first liens continue to support American homeowners by being willing to decrease principal to allow homeowners to access the Hope for Homeowners program, call on major banks to match their support.

WASHINGTON , May 6 /PRNewswire-USNewswire/ -- The Mortgage Investors Coalition (MIC) continues to commend the efforts of the House and Senate in formulating changes to the Hope for Homeowners program that will allow for more homeowners to obtain permanent, low cost fixed rate home financing. The investment community offers its full support for these initiatives and advocates the creation of a task force to administer and implement a new program to provide immediate relief to homeowners facing foreclosure.

As the legislation passed today by the U.S. Senate (S.896 and H.R. 1106) moves to a House-Senate Conference, we urge Congressional leaders to redouble their efforts to make certain the Hope for Homeowner program works as planned.

Mortgage investors are committed to working with the Congress and the Administration to tangibly reduce the principal of troubled homeowners' mortgages. If this is matched by a similar commitment by the banks with their 2nd lien positions, the Hope for Homeowners program can yield measurable results in keeping people in their homes in a lasting effective manner.

Non-bank Investors believe that the Administration has come up with an equitable method of modifying first and second lien positions under the "Making Home Affordable Program." We therefore call on the banks to join with investors in accepting those same guidelines for the Hope for Homeowners program and help homeowners obtain affordable permanent refinancing where they have a better chance of rebuilding the equity in their home.

It is time for the non-bank investors, banks and servicers to come together with the Congress to advocate what is in the best interests of the homeowner. Making the Hope for Homeowners program work is the best chance to keep people in the homes short term and long term. Even though the non-bank investors are willing to accept the reduction of the principal of the 1st lien mortgage, absent a willingness of the banks to accept similar adjustments in their 2nd lien position, the Hope for Homeowners program will not work.

We remain concerned that the large banks are incentivized and now have immunity to increase the value of their own 2nd lien holdings at the expense of homeowner and the investors (including pension funds and foundations) who own the first mortgages...In fact, the large banks have recently been allocated an additional $9.9 billion to modify mortgages and received legal immunity to do so. The banks' active lobbying efforts to defeat cramdown exemplify their willingness to place their interests ahead of the borrower. The Mortgage Investors Coalition did not lobby against cramdown. We look forward to working with all parties involved to ensure that the immunity is not abused to protect past bad acts or fraud, but to help the homeowner.

* Note: For wrapped 2nd liens there should be special consideration of the wrap when contemplating modifications.

SOURCE Mortgage Investors Coalition