[kenavi]

The bad news is that at 31% of income the number of payments exceeds the expected lifetime of the mortgagee! Don't you just hate math?

Right, as long as the mortgage principal itself isn't reduced, the reduced payments mean that the mortgage doesn't get paid off in its original term. These mortgages could turn into perpetual loans. This plan might allow for negative amortization, where the payments are not even enough to cover the interest.

Essentially, these homeowners become renters, with an upside option if housing prices ever recover. Not a bad deal for them at all. Not such a good deal for their neighbors or the rest of us, who might in the interest of fairness ask to re-finance their homes on similar terms.

[TeleStraightShooter]

From what I gather the plan is to lower the interest rate of the mortgage in question to achieve 31% of income ratio.

On average the lender would chip in about 1% (which most are willing to do now) and YOU {via future taxes fronted by Chinese $$$ now} get to pay the mortgage company about $8,000 to cover the remaining 2-3% to arrive @ the 31% of income ratio.