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President Obama's Stimulus/Foreclosure Bill--The Disturbing Reality

Posted by Jay Seville on Friday, February 20th, 2009 at 8:11am.

The Disturbing Reality of President Obama's Foreclosure Bill/Policy

[for the full editorial by Wall Street Journal click here]

Re-default rates are 55% after six months

SEE BOTTOM OF PAGE FOR THE ARLINGTON FORECLOSURE LISTINGS FOR SALE

President Obama yesterday announced his plan to prevent home foreclosures, saying he wanted to be "very clear about what this plan will not do: It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans . . . And it will not reward folks who bought homes they knew from the beginning they would never be able to afford."

obama_housing_stimulus_rescue_359 AP

"We really do wish he were right. In fact, the details released yesterday suggest the President's plan will do all of the above. The plan will help some struggling homeowners. But by investing in failure, the Administration will also prolong the housing downturn and make financing a home purchase more difficult for future borrowers. Meanwhile, the plan isn't likely to slow the continuing decline in housing prices....

Let's focus on the plan's effect on the individual borrower. Anyone with mortgages owned or guaranteed by Fannie Mae and Freddie Mac will be able to refinance to lower rates if his mortgage is between 80% and 105% of the value of the home. This is a sweet deal that is not available, for example, to many renters looking to buy homes now. Sadly for those who deferred the gratification of homeownership, the 20% down payment has now become industry standard. But at least their taxes will allow other people to stay inhomes they can't afford."

NASTY INTERRUPTION BY ME--THIS IS NOT TRUE  cool_217--20% is not the industry standard anymore.  These politicians and newspapers have all been acting like its impossible to get loans at the consumer level.  I'd say half the transactions I do involved FHA loans with 3.5% down.  You do not need 20% to get a conventional loan either--in many cases 5 or 10% is fine....

"Existing borrowers who may not qualify for Fan/Fred refinancing can still receive loan modifications that move their mortgage payments down to 31% of monthly income. In either case, no effort will be made to verify that recipients of aid were truthful on their original mortgage applications. Given that mortgage fraud skyrocketed during the housing boom, and that the Obama Administration intends to assist up to nine million troubled borrowers, we can say with certainty that the unscrupulous will be among those rescued."

"Said Comptroller John Dugan, "One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months and even eight months."

"n fact, the program encourages mortgage servicers to keep the payments low only for five years, after which rates will rise. During the housing bubble, these were called "teaser" rates. Modifications also may extend the term of, say, a 30-year mortgage to 40 years, but still leave the borrower underwater. Research at Credit Suisse suggests that borrowers without equity are not a good bet to stay current. What research cannot answer is how many people will seek assistance when they are told that a new federal program is available to cut their mortgage bill.

Mr. Obama's mortgage plan is his third big economic rescue proposal in a month, and perhaps someone in the White House has noticed that financial markets haven't exactly cheered. Yesterday's end-of-day wrap from UBS put it this way: "Obama Speaks, Market Listens, Sells Off."

What investors, businesses and working Americans want to hear is a President with ideas to spur economic recovery. What they've been getting are plans for a long national Chapter 11 workout."

ANOTHER INTERRUPTION BY ME--SO YOU MEAN AN $8,000,000,000 TRAIN FROM VEGAS TO DISNEYWORLD SLIPPED INTO THE SPENDING BILL BY SENATOR REID IS NOT STIMULATING THE ECONOMY?

   

How about some comments everybody cool_120 Hopefully in a few days I'll have a live feed of foreclosures right here at bottom of this post and hotlinks for foreclosures and short sales will be added to the main navigation bar of website.

 

Classic view
Thumbnail view

SPACIOUS & STUNNING, REFRESHINGLY OPEN, YET CLASSIC FLOORPLAN FILLED W/NATURAL SUNLIGHT....

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Freddie Mac Foreclosure Sold AS-IS, offering 2 yr Home Warranty & up to 3.5% closing costs...

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UPDATED ONE BEDROOM CONDO IN ARLINGTON'S FREDERICK COURTS. BEAUTIFUL HARDWOOD FLOORS,...

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Updated 1 BR, 1 full BA condo. Kit w/tile flr, disposal, countertop, range. Bath: newer vanity,...

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8 Responses to "President Obama's Stimulus/Foreclosure Bill--The Disturbing Reality"

These politicians on BOTH sides of the aisle in general are losers most of the time. Rushing to pass a Spending Bill in lightening speed to hide it's details from American people is bogus all the while support for it was rapidly decreasing nationally. Can you stick your finger in our eyes any better than that?

Posted on Friday, February 20th, 2009 at 10:41 AM.


Brad wrote:
I think that the real meat of this is here:
"Anyone with mortgages owned or guaranteed by Fannie Mae and Freddie Mac will be able to refinance to lower rates if his mortgage is between 80% and 105% of the value of the home."

The problem is going to be finding out whether your mortgage is guaranteed by the Fed Morts.

*dials bank*

Posted on Friday, February 20th, 2009 at 10:52 AM.


So everybody knows, there is an $8000 tax credit for buying a home this year. I need to find out the specs of how long that lasts. I'm taking advantage of it myself and should be ratified Sat.

Brad, I think the overwhelming majority of loans are guaranteed by Freddie/fannie. A simple phone call to your lender(s) would confirm--in theory it should be that simple.

Posted on Friday, February 20th, 2009 at 11:08 AM.


Brad wrote:
Just called and here is the official response:
" Your mortgage is underwritten by ________(not Fanny or Freddie). We will have more information once the details of the plan are available and our plan will be posted on our website in the beginning of March. Please call back then."

So basically the girl didn't know much. In hindsight I should have went up the food chain...

Posted on Friday, February 20th, 2009 at 12:25 PM.


flood insurance man wrote:
"$8000 tax credit for buying a home this year"
next year, use that to pay on the princliple of your 30 year mortgage and you could chop off almost 9 years!

Posted on Tuesday, September 15th, 2009 at 4:45 PM.


Dual flush toilets wrote:
With the Dow close to 10,000 and consumer confidence is increasing. Lets hope this year's shopping season kick off the economy with home sales increasing in the spring of 2010. I have a few buddies in commercial real estate down in fort myers/ naples area. They are seeing an increase in renters. Hopefully this will be the end of this recession and not just a W recession with markets going back into the toilets in 2010.

Posted on Tuesday, September 29th, 2009 at 11:31 AM.


Billy C wrote:
This Christmas season should tell us where we are truly at when it comes to the economy. According to many reports black Friday went well. Should be interesting. Unfortunately the three year balloon loan payments are on the horizon.

toilets | dual flush toilet | low flow toilets

Posted on Tuesday, December 1st, 2009 at 3:21 PM.


nicolas wrote:
I think there are just to many homeowners in the us. Many of those people can just not afford a host, so there should be more flats and appartements to rent. In Switzerland over have the people are home renters.
WM2010

Posted on Wednesday, January 27th, 2010 at 5:59 AM.




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