Word: loan
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...stated objectives. To be fair, about C$40 billion has been spent to date, but Canadian banks are just sitting on the new cash like the proverbial goose. "There is no evidence of more credit becoming available," says analyst Michael Goldberg with Toronto-based Desjardins Securities Inc. "In fact loan growth in the economy is slowing...
Under the new plan, servicers, the companies that collect mortgage checks, will be paid $1,000 every time they cut the interest rate on a loan to reduce the monthly payment to no more than 38% of a borrower's gross income. The government will split the cost of reducing the debt-to-income ratio further than that, down to 31%. Both servicers and borrowers will be paid up to $1,000 a year (for three and five years, respectively) for keeping the loan current...
Even though the program is voluntary, there are early signs that it might be the kick in the pants needed to get servicers to more aggressively rewrite loans. At a mortgage bankers' conference in Tampa, Fla., on Wednesday, servicers praised the incentive structure, and Jamie Dimon, CEO of JPMorgan Chase, went on CNBC to say he thought the plan would "lead to a lot more modifications." An earlier effort to spark loan rewrites proved to be a flop, but the Administration thinks this new program could reach 3 million to 4 million homeowners. The plan also includes an endorsement...
...walk a fine line between helping borrowers who have been caught off guard by tricky mortgage products and falling house prices and those who simply made imprudent decisions and genuinely can't afford their homes. In order to avoid propping up the second group, Treasury won't subsidize loan modifications that reduce the interest rate below 2%. If you can't afford a 2% mortgage, in the eyes of the government, you can't afford your house. The plan also doesn't apply to investors or people with jumbo mortgages - those, historically, larger than $417,000. Loans for homes that...
...relied on the loan-loss estimates of New York University professor Nouriel Roubini, a.k.a. Dr. Doom, who has been sagelike in his predictions about the credit crisis so far. We factored in the banks' results this year, as projected by Wall Street analysts. Besides the hit that banks will take for soured loans, the firms also have losses in their investment accounts. But since markets go up as well as down, we stuck to the actual cost of their lending foibles rather than guess where the market for debt is headed next...