White House Plans Aid For Second Mortgages
The Obama administration Tuesday will unveil measures to address the role of second mortgages or other liens on properties that might be pressuring consumers and businesses.
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, but an industry source says 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--engage in the second mortgage business. Large banks hold 54 percent of the secondary market.
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The House Financial Services Committee Tuesday continues work on mortgage reform legislation, which is meant to crack down on predatory lending.