We did it! BB&T bank backs down 17JAN12

HERE is a good news story that shows that when people are united for a just cause victory is possible. BB&T has reached an agreement with the Higher Ground Empowerment Center and renegotiated the church's mortgage to a rate they can afford to pay! Because of a massive public outcry against foreclosure on the church BB&T backed down (see my post on this blog IS NOTHING SACRED? 13JAN12). Thank you to everyone that signed the petition to BB&T!

Incredible news! More than 65,000 Rebuild the Dream members like you signed a petition to help save a community church from an unfair foreclosure and eviction by BB&T, one of the ten biggest banks in the country. And we did it! After an intense, 3-hour negotiation today, BB&T backed down and agreed to a fair deal with the Higher Ground Empowerment Center church. This victory was a complete turnaround, led heroically by local activists at Occupy Atlanta and Rainbow PUSH Coalition. The sudden groundswell of media coverage, local community action, and our national petition forced BB&T's hand. This outcome shows: when we're united, we can stop big banks in their tracks and get them to treat people with dignity. The more banks that have public re-negotiations like this, the bigger the momentum will be for millions of other struggling homeowners who are in the same boat. Can you let your friends and family know about this victory? It's important to spread the word that when we work together, we can accomplish great things. This morning, the church met with bank executives at their high-rise office building in downtown Atlanta. After hours of negotiation, the bank agreed to modify the loan to make it possible for the church to pay it back over time. Just as importantly, the bank agreed to transfer the deed of the property back to the church. (The bank had seized ownership of the property last year. This was a critical issue for the church, which could not bear to "rent" a property they had owned for longer than a century.) The bank even agreed to meet with community members in the surrounding Vine City neighborhood next month to discuss ways in which BB&T can invest in the local community. "Today was a triumph for Higher Ground!" said Senior Pastor Dexter Johnson. "Thank God for Occupy Atlanta! Thank God for Brother Joe Beasley [of Rainbow PUSH Coalition]!" "BB&T has done the right thing, and we're grateful for that," said Tim Franzen of Occupy Atlanta. "Today is an overwhelming victory for the Occupy Movement and the Vine City Community. We couldn’t have done it without Rebuild the Dream. And this is just the start of a lot of work we must all do for struggling underwater homeowners and property owners across the country." Thank you to everyone who signed the petition and took a stand for justice and dignity! The petition showed that people across the country were paying attention to BB&T's actions, and added important leverage during the negotiation today. Tell your friends! On Facebook | On Twitter | By Email Rebuild the Dream applauds BB&T's decisions. They should treat all of their customers -- especially those with underwater mortgages -- with the same kind of common sense they showed today. And all banks across the country should do the same, even when the media spotlight is NOT shining on them. Rebuild the Dream will keep campaigning for homeowners and property owners everywhere. The banks got their bailout; NOW LET'S BAIL OUT THE PEOPLE. It will take all of us acting together to win, just like we did with the Higher Ground Empowerment Center church. Thanks for taking a stand, Van and the Rebuild the Dream team

Wall Street's Latest Manufactured Outrage 10JUN11

MORE proof wall street and the banking / financial industry can not be trusted. The propaganda campaign they are launching is not for the benefit, and offers no help or protection for the American home buyer. It DOES make mortgage lenders accept responsibility and risk for the loans they make, and so reduces the chance of another financial meltdown because of the shameless greed of wall street and the banking / financial industry. This from Mother Jones....

The Fed and other regulators have proposed a set of rules that would put new limits on home mortgages: Borrowers would have to put 20 percent down and would have to show that their mortgage payments would amount to no more than 28 percent of their gross monthly income. The Washington Post makes this sound like doomsday:

Nearly three out of every five U.S. borrowers who bought homes last year would not have met the proposed restriction on total debt, according to an analysis by mortgage research firm CoreLogic....If the rules were in effect now, Todd Pearson of Ashburn predicts he'd be shut out of the market. Pearson wants to sell his house and buy another in Chevy Chase. He says he has no debts other than his mortgage. But he figures his mortgage payment alone would exceed the threshold proposed by the new rules.

You have to admit, these rules do sound pretty tough. In fact, they'd pretty much shut down the entire mortgage industry. So what's going on?
Answer: Lots of financial industry whining. As it turns out, regulators aren't saying that mortgage originators can't make any kind of loan they want. 20 percent down, 10 percent down, 5 percent down, whatever. Go to town. What they are saying is that if mortgage loans are bundled up into securities and resold, they want the issuer of the security to retain 5 percent of the total offering. That's part of Dodd-Frank, and it's designed to give issuers an incentive to make sure their mortgage securities aren't full of toxic waste. If they have to keep a piece of the action on their own books, they'll want to make sure their securities are safe and sound.
However, there's an exception: If your mortgages all conform to the new rules, you don't have to retain that 5 percent chunk. That's all that's happening. You can make any kind of loan you want, but if it's anything other than super safe, you have to keep a piece of it on your books.
The financial industry is in an uproar over this, claiming that it would shut millions of people out of the housing market. That's nonsense. Neither Todd Pearson nor anyone else is being denied a loan on whatever terms they can get one. All that's happening is that when their mortgages get bundled up and resold, the ABS issuer has to keep a 5 percent stake. The mortgage industry is on a rampage over this, claiming that it will dramatically raise the cost of mortgages, but that's nonsense too. Being forced to keep a 5 percent stake probably will have an impact on ABS issuers—that's the whole intent, after all—but the financial impact is almost certainly pretty minuscule. Tom Lawler at Calculated Risk roughly estimates it at perhaps 20 basis points at most on a nonconforming loan. In other words, the rate on nonconforming mortgages might go up 0.2 percentage points. At most. Something on the order of 0.1 percentage points or less is probably closer to reality.
This is yet another case of the financial industry biting the hand that's trying to help it out. The truth is that it would probably be a good idea to require ABS issuers to retain a 5 percent stake in every mortgage bundle they sell. But Dodd-Frank threw them a bone in the form of an exemption for loans that were transparently high quality and virtually certain not to default. And the result? Endless whining, a massive lobbying effort, and glossy four-color demagoguery about hardworking middle-class families being shut out of the mortgage market. Welcome to Wall Street.

Front page image: A GS/Fotopedia

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