Refinancing mortages

Well, that’s all well and good. It’s totally necessary in fact.
I would like to remind people that refinancing a mortage at lower interest rate is going to cut into profits though! (duh. If your customer was meant to pay 1000 a month and he now only pays you 500, your bottom line is in DEEP trouble)
Furthermore, it’s quite easy to refinance downwards, but you can’t later say “the economy is picking up, let’s raise your mortage rate arbitrarily!” … in other words, these refinancings will slow down recovery in the mortage sector for… oh, say the next 20 years until the mortages complete? So… refinancing 1/3 of your existing mortages at lower rates. Ok.
And, BTW, they are saying that payments STILL need to be made. So, those who just lost their jobs and can’t get new ones are still in deep trouble anyhow. … BTW, citi is not doing this for the sake of the homeowners. They are just trying to avoid/ delay a spiralling vicious cycle of property collapse + even more foreclosures.
My projections are: those mortages? They’re going to turn VERY toxic very soon. Why?
Cause Citi has just basically announced: If you stop paying your mortages, we’ll drop your mortage rate.
YEAH. If you look at it like that, suddenly their announcement doesn’t look so smart, does it?
Basically, how are you supposed to separate those who NEED the refinancing from those who don’t? Citi thinks they can do it based on their analysis department I suppose. Unfortunatly, they haven’t learnt the lesson that their risk analysts haven’t been doing a very good job lately.
Their offer to reduce rates for 1/3 of their mortages will probably end up causing them to lower rates for 100% of their mortages.
There is a VERY good reason why the previous system was in place people. You know, previous credit syatem, you make all your payments on time, your credit rating is good, you are charged lower interest, so the incentive is to pay on time? … Now it seems that when your credit rating goes SOUR, your interest rate is going to fall.
Hello. You don’t have to be a rocket scientist to figure out that, in this situation, if Person A,B and C look and sees Person D stopped paying his mortage… and his interest rate got dropped, and he then resumed paying his mortage… Person C will also delay payments and request a reduction. Then B joins in. Eventually your mortage system goes to hell. Oh wait, aren’t American mortages ALREADY in trouble?
UPDATE:
http://www.thestreet.com/story/10447292/1/feds-streamlining-homeowner-aid.html
“To qualify, borrowers would have to be at least three months behind on their home loans, and would need to owe 90% or more than the home is currently worth”
HELLO!!!! HELLO!!!! You guys… are warning bells not going off in your heads right now? Seriously???
Hello??? Again, america is rewarding failure. does america understand??? you are giving INCENTIVES to FAIL. Giving out bailout money without requiring red tape OR punishments to Director renumeration… INCENTIVES TO FAIL are a blindingly obvious bad decision.