Not arguing with you. Just trying to understand what's going on here. Are they talking about lower rates than the homeowners are now paying, or lower rates than what they would otherwise adjust to.
If homeowners can stay in their homes with reasonable rate adjustments is that not a win for both borrower and lender?
Somewhere between the low rates that they are now paying and what they will be paying when the rates go up.
Most of the plans I've seen floated call for converting the loans to fixed rates at about the original teaser rate, which was below market when offered, and well below market now, and very far below the contract rate to which the loan was to adjust.
If homeowners can stay in their homes with reasonable rate adjustments is that not a win for both borrower and lender?
Perhaps in the old days, when the lenders were lending their own money. Now the loans are aggregated, and the packages split up. You might buy the rights to repayment of the principal. I might buy the interest payments from year 5 to year 10 of the loan. You'd come out ok if the loan was modified; I'd lose. On the other hand, what if we modified the loan so it would pay above market interest, but cut the principal of the loan in half. The payments remain the same, but now you only get half of your money, and I get all of mine. Would that be a win - win for everybody?