As the details of this plan ooze out, it's apparent that the plan benefits the mortgage service companies, principally, and that it screws mortgage purchasers. You should spend some time reading the details and understanding how the flows work.
The mortgage holders are not the ones making adjustments to the terms. it's the mortgage servicers, whose skin in the game is 0 from a credit extension perspective. Their interests are aligned with keeping the junky (Joe McMansion) paying his mortgage at whatever rate of interest, because the servicer is earning fees for processing. The mortgage holders will likely sue the servicers over this, but it's probably moot: workouts of subprime have been very poorly received by borrowers who wish not to compound the frauds they originally committed in lying on loan docs. So in the end, this appealing plan will have little meaningful effect, other than to serve as an exclamation point to this sad administration.
We’ll see how it works.
Keep in mind that not all these people committed fraud, in fact, I’d say most did not. I’ve originated loans for years and while I never did much subprime, I am in the industry and see what goes on.
Yes, fraud occurred. However, the people that fit the profile of who would get this rate freeze are mostly low-income Americans who had poor to fair credit. A good friend of mine is among them...despite the advice I gave that was ignored.