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Feb 10, 2012 – So, there is a new $26 Billion Dollar mortgage settlement in place. The “New Mortgage Deal” (as CNN calls it) has lots of support behind it as 49 of the 50 state Attorney Generals have signed it. What’s my take on it you may ask? If I were to rank its positive impact on a scale of 1 to 10 (We can call this “The Sammy Scale”) I would put it in a range of about 3-5 depending on the perspective being looked at. There is no doubt about it, this will help “some people” that are in trouble; however, that being said the settlement is fundamentally flawed; as Oklahoma Attorney General Scott Pruitt puts it.

According to the way the settlement is written up it would offer principle reductions to certain homeowners that are upside down. This means that there would be debt forgiven and the principle balance on a participating mortgage would be reduced. So, what’s the issue? The issue is that homeowners that are paying their mortgages on time will not qualify!!!! Let me explain why this is so bad.

· Because of the settlement homeowners will be encouraged to default on their mortgages.

· Many of the homeowners that are currently defaulting on the mortgages don’t have the income they once had so even if they were to have a principle reduction they still would not be able to make their mortgage payments.

The above being stated, I still agree with the settlement; however, in order to really have an impact they need to repeal the “Ultimate Evil Act of Satin and the New World Order” in conjunction with this settlement. By the way, you may know the “Ultimate Evil Act of Satin and the New World Order” as the Frank Dodd Act.

In short, the settlement makes some sense but in the end only good policy and time are going to make the difference. Let me know what you think.

Mortgage Rates Based on Bankrate.com FHA

	Rate	+/-	Last Week
30 Year Mortgage Fixed	3.89%	Up	3.85%
15 Year Mortgage Fixed	3.21%	Up	3.18%
5/1 Fixed Rate Arm	2.88%	Up	2.85%

Samuel Morales

Residential and Commercial Loan Officer

Office: (210) 257-0642

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