[Gandalf_The_Gray]

Headlining the plan was a $75 billion Homeowner Stability Initiative, under which would provide incentives to lenders to cut monthly mortgage payments to sustainable levels. It defines this at no more than 31 percent of a homeowners income.

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?

Regards,
GtG

[sickoflibs]

RE :”The bad news is that at 31% of income the number of payments exceeds the expected lifetime of the mortgagee! “

Could you spell out the math for us please? Thanks

[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.