Help on Second Mortgages to Be Unveiled by US
The Obama administration is expected to unveil measures as soon as today to address the role of second mortgages or other liens on properties that might be pressuring consumers and businesses, according to an industry source.
Thus far, all of the government’s mortgage modification and foreclosure prevention efforts have been focused on primary, or first, mortgages.
It’s unclear how much money is being targeted for the initiative, but it could run as high as $50 billion, the source said. Funding could come from the TARP, which the administration previously tapped for its initial housing relief initiative.
The government recently said there is about $100 billion left in the $700 billion fund.
Under the terms of the plan being discussed, if a first mortgage is being modified, then the second one would automatically be modified as well.
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Industry support for the plan is thought to be strong.
“Right now they get nothing,” said the source. It’s a choice between nothing and something.”
The Obama administration has been working on the second mortgage plan for some time.
Virtually all the major lenders--and loan servicers--also engage in the second mortgage business. Large banks hold 54 percent of the secondary market.
Dow Jones, citing a senior administration official, reported the second mortgage plan will be included in a broader set of mortgage initiatives.
The House Financial Services Committee Tuesday continues work on mortgage reform legislation, which is meant to crack down on predatory lending.