Obama Administration Launches Housing Plan

[WriteDown]

Source: WSJ

WASHINGTON -- The Obama administration Wednesday unveiled key guidelines for its housing market rescue plan that should enable loan servicers to immediately start modifying eligible mortgages.

Under the new guidelines, modified loans would have to complete a 90 day trial period before any government payments to servicers, borrowers and mortgage holders kick in.
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Only mortgages originated on or before Jan. 1, 2009 will qualify for the program, which will accept new borrowers through the end of 2012.

"Two weeks ago, the president laid out a clear path forward to helping up to 9 million families restructure or refinance their mortgages to a payment that is affordable now and into the future," Treasury Secretary Timothy Geithner said Wednesday in a statement. "Today, we are providing servicers with the details they need to begin helping eligible borrowers."

Read more: http://online.wsj.com/article/SB123617623602129441.html?mod=igoogle_wsj_gadgv1&

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As usual, people who pay their mortgages get the shaft. Also, people who saved and actually made a sizeable down payment on their mortgage are also screwed.

[Mojorabbit]

1. How is this going to help?

"Only mortgages originated on or before Jan. 1, 2009"
These will be people who have only owned their house for a month or so or am I reading this wrong.

[WriteDown]

2. You've got it backwards.

:)

[Mojorabbit]

10. Thanks

I just went back and reread it. I am having one of those days. :)

[Connie_Corleone]

4. You're reading it wrong.

[Tim01]

3. So, is this refinancing?

Or are we helping them pay for their house?

[kiranon]

5. Would be better to buy down mortgage rates to 4 or 4.5% for anyone who is underwater.

Or, even for everyone who wants to lower their rates. Would be cheaper than paying money to all the banks and would have broad support. My mortgage is at 4.75 and I don't need it and there are many in my position. For example, buy down rates to 4% for those with mortgages up to x amount of money and those above that amount to 4.5 or 5% in a graduated scale. Wouldn't need all the paper work and only good for one rate change per household. Have a flat fee for title costs and other charges.

[4lbs]

6. Reading the details, it's pretty good.

From the WSJ link:

<snip>
Under the program, lenders will have to reduce monthly payments on mortgages to no greater than 38% of a borrower's income. The government will then match further reductions in monthly payments dollar-for dollar from 38% down to 31% debt-to-income ratio for the borrower.

After five years, "the interest rate can be gradually stepped-up by 1% per year to the conforming loan survey rate in place at the time of the modification," Treasury said in a document released Wednesday.

Treasury said that in order to reach that 31% debt-to-income ratio level, interest payments will first be reduced down to as low as 2%.

In cases where loans fail the net present value test, mortgage insurers have agreed to pay partial claims in order to help the borrower avoid foreclosure, Treasury said.

<snip>

[snappyturtle]

7. Even though this program would do nothing for Mr. Snappy & me, I

am glad that some foreclosures will be adverted with these new policies. I do not want to see foreclosures effecting the value of our property nor do I want to see families homeless. Our mortgage interest rate is far from attractive but we're making it as long as we have work. I do not feel as if we're getting the shaft.

[northernlights]

8. If this will put a bottom under the market

and encourage sideliners waiting for the bottom to start buying, then even though I have no mortgage because I saved and payed cash...I'm for it.

I desperately need just 1 of Obama's programs to work for me. Just 1 of them.

Either housing, or education or jobs. Any one of them will save my ass. If I can sell my house, fine. Or get decent funding for my education, fine. Or get a job fine. 1 of the 3. Otherwise, I'm so totally fucked it's truly pathetic.

[PSPS]

9. We don't want or need a "bottom under the market."

Property values are still too high.

This plan looks OK in that we won't be gifting the liars their McMansions. The 31 - 38% DTI window where the taxpayers are forced to pay half the mortgage payment for the borrower is bothersome.

In any case, this plan appears to do nothing at all for those who bought beyond their means, and that's just as it should be.