So the $300 billion -- Hope for Homeowners program has inspired about --
100 --
applications for help.
Dana Olick explains the trouble:
"Now I realize many of these lenders are helping folks in-house, but the idea behind the H4H program was that all these lenders would flock to them in droves to get nice, clean, FHA-insured loans. The sticky point is the principal write-down. Word on the street is that the lenders either don’t see a better value in writing down principal as compared to foreclosing on the house, or the lenders can’t because they’re acting as servicers and the loans were sold off to investors, and the investors don’t allow the change."I wonder how much this has cost the taxpayers so far (not that that matters, of course). Why does one picture some bored HUD employees at their desks in between coffee, bathroom breaks, text messaging and nail filing waiting for the phone to ring . . . but I digress. Anyway, "they" have a new plan, which includes 40-year mortgages. Sounds pleasant.
4 comments:
Fannie and Freddie are also suspending foreclosures until Jan in order to give "homeowners" more time to work out a new payment plan.
"The companies plan to reduce interest rates for up to five years and lengthen repayment terms to as much as 40 years to trim monthly payments to roughly 38 percent of a homeowner’s monthly pretax salary. In some cases, borrowers may qualify to temporarily reduce the principal amount of the loan, which would be due without interest if the house is sold or refinanced. "
http://tinyurl.com/5gof69
Keeping these people in overpriced houses is not the right answer. They will either default on the new loan, or live under a crushing pile of debt for decades.
Leroy said...
"Keeping these people in overpriced houses is not the right answer. They will either default on the new loan, or live under a crushing pile of debt for decades."
I agree - it also delays the eventual recovery. The latest news out of hard hit CA were that sales are still way up - thanks in large part to all the foreclosures driving the market. Whats going to happen to sales when they are not driven by foreclosures?
I keep hearing talking heads saying that we must stop the decline of housing prices. I keep screaming at the tv: WHY?!
With the disclaimer yet again that I know nothing about economics, and this is a strictly man-on-the-street perspective:
Housing prices were only able to get this insane because banks let people borrow money for outrageous terms and some people deceived banks about how much they could afford. So they were all fakes.
Why didn't someone stand up and call time-out when awful split-levels in Manassas were selling for almost $600K?
Isn't essential for house prices to continue to fall until they are back within the realm of reason and TRUE affordability? Isn't that what has happened in PWC, hence the incredible increase in sale activity?
Banks REALLY believed appraisers in 2005 who said ugly brick ranches on busy roads 40 miles away from D.C. were worth half a million dollars?
What good would be gained from keeping houses at fake prices?
Tabitha, I agree and take it a step further - when I hear the fear and sadness when possible "deflation" in general is discussed, I wonder, how many times in the last 3 or 4 years have I heard people complaining that gas, health care costs, school tuition, groceries, airfare, etc., are all going up much faster than their salaries are? With so many people on fixed incomes or frozen (or nearly frozen) salaries or struggling to save for retirement where inflation now makes saved dollars worth less and less for later, isn't deflation is a good thing for a lot of people.
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