The White House and Congress need to walk a fine line between assisting homeowners facing foreclosure and imposing new laws or regulations that result in fewer Americans having access to mortgages, Treasury Secretary Henry Paulson said Friday in Chicago.
Virtually every corner of the federal government, including the Federal Reserve, is under pressure to respond to a rising number of home mortgage foreclosures, especially among people living in their homes as opposed to speculating on residential properties.
One way for homeowners to prevent foreclosures has fallen victim to current mortgage lending practices, Paulson said in a wide-ranging interview at the Tribune.
Typically, homeowners no longer have a simple relationship with mortgage lenders or holders of mortgages. In the past lenders were locally based and more amenable to working out late payment problems with local customers.
"The mortgage process has been disaggregated" through global trading in mortgage-backed securities, he said. "It's not as simple as a homeowner going to their banker who makes and holds a mortgage to do a work-out."
Restoring the traditional ability of homeowners to seek payment negotiations with lenders will not be easy, he said. Mortgage originators, who typically sell the mortgages they generate, and mortgage service agencies, which may or may not have a direct stake in the mortgage, need to be the principal sources of mortgage work-outs, he said.
The complexity of mortgage finance delays rapid assistance to homeowners in peril, he said. — Internet
New laws might limit access to mortgages: Paulson
FE Team | Published: September 17, 2007 00:00:00 | Updated: February 01, 2018 00:00:00
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