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Posted on 09/04/2010 9:54:19 PM PDT by The Magical Mischief Tour
The Obama administration on Tuesday will launch its most ambitious effort at reducing mortgage balances for homeowners who owe more than their homes are worth.
Officials say between 500,000 and 1.5 million so-called underwater loans could be modified through the program, the first initiative to target homeowners who are current on their mortgage payments but are at risk of default because they have no equity in their homes. Some experts are warning, however, that the same knots that tied up prior initiatives could do so again.
Under the new "short refinance" program, banks and other creditors that write down mortgages to less than the value of the property can essentially hand off the reduced loan to the government. The process involves refinancing borrowers into loans backed by the Federal Housing Administration.
(Excerpt) Read more at foxnews.com ...
we do not need freebies, we need job restoration and tax cuts.
And in a totally unrelated story the U.S. is now bankrupt.
Not again!
Enough already.
and this isn’t going to tick off those of us who are not upside down and are making out house payment each month /s
I really believe what they should have done is people who lost their jobs, freeze their mortgages for one year. This going back and forth and waiting on modifications is a joke. And the job market is simply a disaster.
So they are current on their mortgage payments, but "underwater". The only reason they would be at risk is if they choose not to pay anymore. So, the rest of us should give them a bailout to keep them from making the dishonorable choice. What is wrong with this country?????
Personally I think they should just leave everything alone, this constant tinkering, new regulations etc... is exactly the same stuff that sent us into the Great Depression just as things "appeared" to be recovering in the 30's...
You bet it will!
Debt is deflationary, and deficit spending is unsustainable.
This means that the more that the government pays for things that it can’t afford, the more jobs will be lost, the more that home prices will fall, etc.
In other words, 0bama’s proposed policy will achieve the precise opposite of its stated goal.
Where’s my handout! I rent and would very much like to decrease the monthly costs....hummm. Maybe a rent voucher for utilities that are going to be brutal this winter!
It's time for someone to step up and make the point, over and over, that this whole mess grew out of the Clinton expansion of such loans and that Frank and others fought every attempt to add regulations, limit risky loans, and monitor Fannie and Freddie better. Every time Barry or his Boyz mention housing someone needs to mention the fact that they can't be trusted to fix a problem they created.
Regards
Why in the world should the federal government be in the business of telling lenders that they are prohibited from collecting payments on a legal Deed of Trust?
The markets will not take to this trial balloon well at all. Just the rumor of a fiasco like this could be enough to trip the trigger on another massive sell off.
These people are nuts...
As far as underwater mortgages are concerned, if the person can make their payments, eventually they are going to build equity in the property. I understand if someone lost a job or otherwise can’t pay anymore, that’s one thing. But if someone is still working, and they can afford to make their payments, eventually they will pay down the principal balance on the mortgage and they will build equity. And this is true even in down markets where values have dropped so much.
It’s disturbing to hear that some people are “strategically” defaulting. They can afford to pay, but choose to walk away from the house. Unfortunately people like that will be able to line up for their handout too, if this program goes into effect.
Housing values have dropped by over 40% in some markets. I guess I thought they couldn’t drop any more. But we’ll see.
Isn’t a short refinance like a short sale? From the point of view of the lender, the lender has to refinance and write off part of the loan, right?
Do we really need more government intervention in the mortgage market? I’m concerned that whatever government does, it will distort the market more, and perhaps cause further drops in values.
I hear that there is a looming crisis in mortgages on commercial properties. Many office buildings, shopping malls, etc. also have mortgages on them. And there are the same fundamental problems in that piece of the mortgage industry with falling values, inability to make payments, etc.
On the other hand, is there any business opportunity for private lenders to go in and refinance people’s mortgages?
What does that mean, "freeze their mortgages for one year"? You mean unemployed people get to have their borrowed money rent-free for a year? And what about everybody else who continues to pay monthly rent on the chunk of money they borrowed to buy their homes?
These people, especially in the San Diego area, didn't see a red flag when they were trying to purchase an under 1,000 square foot home for $600,000?
The city is beautiful, but I left after 1 year. Let's weigh my options: a shack in SD for half a million, or a 4 bedroom 2100 square foot all brick home in Fort Worth for 139k?
Just another bank bailout. Once again, the banks do not have to take any responsibility for lending to people who couldn’t pay their mortgage or for lending in a fraudulently increased market knowing full well that a crash was coming. Force the banks to eat it.
The real problem, here, involves loans not owned by Fannie or Freddie. Let’s assume there are 3 houses in a row in a subdivision. All are the same model, they are essentially identical. All 3 of the homeowners are underwater with their mortgage. Two of the homes have mortages owned by Fannie/Freddie, while the third has a mortgage owned by a bank. If the Fannie/Freddie mortgages are “adjusted,” then two of the homeowners can sell their property without loss, and can escape with no damage to their credit. The homeowner with a bank-owned mortgage, however, must default on his mortgage before the bank will even consider a “short sale” and even after that, the homeowner must prove he has a negative net worth before the short sale is approved.
This proposal gives some Americans an advantage over others at the expense of the taxpayers. It seems to me that there is an equal protection argument somewhere in this scenario.
0bama Money!
That would have been an easier solution than the unemployed calling their lenders and saying they can’t pay and having to got thru the modification process which many couldn’t do to begin with because of their job losses. And no, it would not be free, the lender could tack on that year to the back of the loan.
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If the lender chooses to make that decision, then fine. However, the federal government coming in and telling these lenders that they have to modify a contract is asinine.
Beats the heck out of having to declare a few more banks insolvent...
Deregulation and tax cuts WILL restore jobs. But nothing else will.
I know. We will not get what we need from these feds this time around.
You’re funny!
Actually, I have been on all sides of this one.
We have gone from paying our bills on time, every time, then when we could no longer make payments due to unemployment, the bank said, do not pay, complete mod. forms, we would not lose our home, etc. What a disaster. My folder resembles a large book due to the paperwork!
It took them a few months until they determined that we would pay a certain amount for three months to see if we could make those payments and we did. Then we had to complete the forms again and make three more payments but larger ones this time, and we did and on time.
Had to do this again in June and again on time, until now.
It is stressful, frustrating and frightening all at the same time. If I were single and did not have kids, things would be easier but when you have kids and have been living in your house for at least 10 years, and you know you are having to sell your personal belongings, a little at a time, just to make ends meet, it becomes depressing as well.
You wonder what is next and where you will end up and with what since jobs are so tight right now.
Looks like only suckers pay down or pay off their mortgages in this hopie changie society.
If you get to be old and have sacrificed and scrimped to pay off your mortgage, now with a paid off house you are considered “rich” and a hoarder of wealth, resented for drawing SS and MEDICARE by the “workers” with their big mortgages, big cars, and big bills
Who'd have thought this ratface ignoramus potus would have everyone at each other’s throats over class warfare in less than 2 years
I hope things work out for you. It sounds like you are trying to do things the right way.
FRegards,
LH
The process involves refinancing borrowers into loans backed by the Federal Housing Administration.
What could go wrong with a shell game like that?.
They are not at risk as long as they make their payments.
So I now get to pay for people who bought too much home after paying mine off.
SCREW THESE PEOPLE!
Thanks. We’ll get through this.
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