So it looks like we are bailing out stupid people again

[droski]

Creating a $75 billion homeowner stability initiative to reduce monthly payments for at-risk borrowers by subsidizing interest rates. The goal would be to bring payments to no more than 31% of a borrower's income.

Obama seeks to aid up to 9 million borrowers - Feb. 18, 2009

I do think SOMETHING needs to be done, but this just seems like rewarding people who overbought. First off, people can lie about thier incomes easily. What about people who get layed off before they do the loan modification and then get another job afterwords? if i bought a $1,000,000 home and can only afford a $300,000 home is my payment going to drop 70%? the fraud is going to be unbelievable.

[oklavol]

Based on what I read they are just refinancing loans to lower the payment they will still owe the same amount:

7. Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

http://ac360.blogs.cnn.com/2009/02/18/qa-on-the-foreclosure-plan-and-what-it-means-for-you/

[crazyguy]

self reported income....what a beautiful thing.

[VolsNSkinsFan]

all they have to do is turn 30 year fixed or whatever garbage loan they have into 40 or 50 year fixed at 5%. Boom problem solved. Who cares how long it takes to pay off as long as they are still paying into the "system"

seems fair and too easy for this to actualy work

[oklavol]

Originally Posted by VolsNSkinsFan

all they have to do is turn 30 year fixed or whatever garbage loan they have into 40 or 50 year fixed at 5%. Boom problem solved. Who cares how long it takes to pay off as long as they are still paying into the "system"

seems fair and too easy for this to actualy work

That's what I was thinking, but from what I understand people in California, because homes are so expensive already have 50 yr loans, so I guess those become 80 or 100 yr mortgages. That will be a problem.

[droski]

Originally Posted by oklavol

Based on what I read they are just refinancing loans to lower the payment they will still owe the same amount:

apparently they will allow bankrupcy judges to write down the principle which is a horrible idea.

[VolsNSkinsFan]

Do they really already have 50 year mortgages in Cali?? Dorski chime in...

I dont think that it makes a difference in the length of the loan, the important thing (imo) is that they pay the interest.

Should be interesting to see how the market reacts

[VolsNSkinsFan]

Originally Posted by droski

apparently they will allow bankrupcy judges to write down the principle which is a horrible idea.

yes horrible... who eats the difference?

[crazyguy]

Originally Posted by droski

apparently they will allow bankrupcy attourneys to write down the principle which is a horrible idea.

Maybe I'm just cynical, but this is how I see this playing out. They write down the principles on these things, or even move them in to fixed rate mortgages-supposedly helping the consumer. The problem is that in 10 years, these guys are going to be whining again and will figure out how to parlay all of this "good will" into screwing the consumer with some new "product" to make this money back hand over fist. It won't happen on the current homes of course-but future mortgages are going to make more money for the lender.

[droski]

Originally Posted by VolsNSkinsFan

yes horrible... who eats the difference?

the lender of course. and what do you think the lender will do to us honest people to pay for this increased risk? require more money down and higher interest rates.

[crazyguy]

Originally Posted by VolsNSkinsFan

yes horrible... who eats the difference?

the consumer ultimately. How do comps not continue to fall in value as well?

[droski]

the original proposal i saw required that if the person takes this lower interest rate the govt gets 50% of any future upside on the house which makes a lot of sense. at least then only the real desperate will take this deal and it discourages fraud from those who can actually afford their payments. apparently they got rid of that though.

[crazyguy]

Originally Posted by droski

the original proposal i saw required that if the person takes this lower interest rate the govt gets 50% of any future upside on the house which makes a lot of sense. at least then only the real desperate will take this deal and it discourages fraud from those who can actually afford their payments. apparently they got rid of that though.

i wonder how this would effect the death tax.

[T-TownVol]

Originally Posted by droski

the original proposal i saw required that if the person takes this lower interest rate the govt gets 50% of any future upside on the house which makes a lot of sense. at least then only the real desperate will take this deal and it discourages fraud from those who can actually afford their payments. apparently they got rid of that though.

that part was discriminatory

[T-TownVol]

Originally Posted by crazyguy

i wonder how this would effect the death tax.

haven't you heard...NO One Dies in OBAMANATION!