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On Monday, NBC's Lisa Myers told us about the FDIC's pilot program for modifying home mortgages offered by IndyMac Bank. Its target is to have no borrower pay more than 38% of monthly income on house payments. Now all three newscasts covered the proposal by the Federal Housing Finance Agency, which took control of FannieMae and FreddieMac, to follow in the FDIC's footsteps. Payments will be reduced not by reducing the amount owed, but by cutting the interest rate and lengthening the schedule. "The pressure is growing on banks that have received money from the federal government to use that money to do more for homeowners," ABC's Betsy Stark (no link) observed. Accordingly, JP Morgan, Bank of America, HSBC and Citigroup are following the lead of the FDIC and FHFA, CBS' Bill Whitaker reported.
Not all homeowners will be eligible; only those falling behind on their payments and whose home's value has fallen so sharply that what they owe exceeds 90% of its equity--oftentimes even 100%. NBC, which relied on its sibling financial news channel for its Detroit coverage, turned to CNBC again for the real estate story. Trish Regan noted that many see the plan as "simply unfair" since the relief is not extended to those who were "responsible and only bought as much home as they could afford." Meanwhile, for those who do renegotiate, "millions of homeowners will still be stuck in properties that are worth less now than when they bought them."
Robert Manning is the consumer debt expert given free publicity by Priya David for CBS' Dollars and Sense series. Manning has isolated a category of credit card debtor he has called the Near Bankrupt and operates his program through the resolution firms In Charge and Hope Financial in 25 states. Before he came along, banks used to insist that borrowers make the choice between declaring bankruptcy and pledging 100% debt repayment. Manning's formula persuades banks to accept partial payment--sometimes as little as 37c on the dollar.
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