distinguished fellow

Banks Using Leverage to Force Home Equity Repayments

Your article isn't sufficiently clear as to whom it is that makes / pays the reimbursement (nor why it is called a reimbursement, which makes it sound like some government payment to banks) mentioned in:
"When HELOC securitizations reach a certain delinquency level, banks are no longer reimbursed for HELOC advances to borrowers."
Dr.LKR.

Some Straight Talk On the Mortgage Mess

Comments stimulated by Herb Greenberg/Mark Hanson article and Sec. Paulson's WSJ 12/07/07 editorial section article:

Seems to me there are two basic problems underlying the mortgage mess. 1) people, such as mortgage brokers, who lied when filling out the related paperwork, and 2) a combined failure of good sense and prudent banking principles.

Herb Greenberg's inclusion of Mr. Mark Hanson's descriptions gives the best yet revelation of how the banking systems failed to use both good sense and prudent banking principles, and it is the first for me at revealing how borrowers who had good money and good value in their homes may not have used good sense in the amount of money they borrowed and / or may not have used good sense in how they used that money. E.g., if they took most of that money and spent it on vacation travel or bot expensive cars or invested in securities such as CFC or IMB, (and failed to sell them when these securities did their bonanza run up) they may suffer in making good on their mortgage loans. If they invested in PG or BA back in 2003 or 04, they can sell those at a profit and pay off those loans. For those who plowed the money into home remodelings and refurnishings, (as apparently happened on Long Island) and incurred greater property tax bills, it remains to be seen what will happen there. All this i've described relates to people who had a good financial position and availed themselves of the results of the FOMC's low interest rates for several years of the 2000's. (As i see it no one in good conscience can blame any of this on the FOMC as some talking heads have done on tv.)

My reading of Sec. of Treasury's WSJ article of Dec.7/07 is that certain subprime borrowers who have managed to continue their payments (I here assume this means payment of principle and interest, as in the good old fashioned fixed rate 30yr mortgages prior to ARM's being invented by the mortagage and banking industry.) in the period of time before the ARMs kick in are to be the ones who will benefit from efforts described as "The government is uniquely positioned to help avoid unnecessary defaults."

This makes sense to me as it appears to relate to enabling certain people to remain in "their" homes, continue to pay at a rate the mortgage industry sanctioned, and develop another batch of American home owners rather than increase the number of people living in "public housing." There is societal, indeed even conservative, value here. The mortgage and banking industry 'thunked' up these tactics and marketed them; they should bear most of the 'costs;' I as i read it Sec. Paulson's article mainly doesn't relate to most of the costs.

This should be able to be done with out the U.S. Treasury bailing out Freddie Mac or FNMA.
Best wishes to all, Dr. L.K.Richards, m.d., d.l.f.a.p.a.