Following Bank of America’s new Program, the Federal Government is looking for ways to help more Underwater Borrowers avoid Foreclosure, by having their Principal Amounts reduced, regardless of if they are in default or not.
Here are a few excerpts from a New York Times Article, and my thoughts about them.
- New initiatives to help troubled homeowners, potentially refinancing millions of them into fresh government-backed mortgages with lower payments.
If the people are making their payments now, they shouldn’t be automatically granted lower payments simply because they chose to buy a home with no money down, were part of a mortgage scam, or because they refinanced during the housing boom. There needs to be some serious standards set for this to insure that they are only assisting people who will foreclose without the government support. There still ought to be punishments, consequences for people who get all the “free money”
- Temporarily reduce the payments of borrowers who are unemployed.
I think this is a great idea. The key word in this statement is “Temporarily.” Unemployment is hard, but people should still be responsible to keep their financial commitments.
- Encourage lenders to write down the value of loans held by borrowers in modification programs to make their mortgages more affordable.
Many people who will want to take advantage of this program have affordable mortgages. When they bought the house or signed the loan documents they did it because it was something they could afford.
- The new initiatives could well spur protests among those who have kept up their payments and are not in trouble.
Absolutely. Why is it fair that people who aren’t frugal, who don’t handle their money get rewarded when those who are responsible do not.
- White House briefing, officials emphasized that no new taxpayer money would be used for the programs. Instead, funds to provide incentives for loan servicers to participate would be drawn from the $50 billion allotted to housing in the Troubled Asset Relief Program.
Okay, who else can see the lie in this statement? Has anybody looked at the Government Deficit lately? If The Government actually had money in an account they could say this, but the fact is they don’t. They have debt, and loads of it. This and all government spending is payed for by borrowing money, and then having it paid back by American Taxpayers.
- The administration’s earlier efforts to stem foreclosures have largely been directed at borrowers who were experiencing financial hardship. But the biggest new initiative, which is also likely to be the most controversial, will involve the government, through the Federal Housing Administration, refinancing loans for borrowers who simply owe more than their houses are worth.
And that is all that really should be receiving Government Money.
- About 11 million households, or a fifth of those with mortgages, are in this position, known as being underwater. Some of these borrowers refinanced their houses during the boom and took cash out, leaving them vulnerable when prices declined. Others simply had the misfortune to buy at the peak.
How scary is that. 20% of US mortgages are underwater. And now government is asking banks to step up and fix that problem with new government backed mortgages? Do you know how much money that is? Mortgage loans are almost always the single largest debt individuals have.
- If successful, however, the plan could pose a different type of problem: it could put taxpayers at increased risk. If many additional borrowers move into F.H.A. loans, a renewed downturn in the housing market could send that government agency into the red.
Yup. And cause a complete financial meltdown of our already over-levereged nation.
- The new initiatives will expand the government’s current mortgage modification plan, announced a year ago with great fanfare. It has resulted in fewer than 200,000 people getting permanent new loans. As many as seven million borrowers are seriously delinquent on their loans and at risk of foreclosure.
Ouch. That is a lot of people at risk for foreclosure. We’ll look at the positive, the previous modification plans did help nearly 200,000 people.
- Fewer people are beginning default, the number of borrowers who are seriously distressed is rising. In the fourth quarter, the number of households at least 90 days past due on their mortgages swelled by 270,000
This is great news. If we can get more real jobs created it will decrease even more and the problem will solve itself without all this additional government spending and burden on taxpayers.
- The government is seeking to persuade people to stay in their homes by aligning the mortgage debt with the asset value, which is the only viable path to real housing stability.
No, actually real housing stability will be achieved by people buying real estate they can afford and by making their payments until the mortgage is payed off.
via Find Foreclosures, HUD Homes, Notice of Defaults.
Do you want to buy a home that is a fixer upper, but don’t have the cash to fix it up? Is the home you are looking to buy a 
