To my understanding this bill sets out to help people who are so called under water, sound so much like a great idea to me, Mortgage rates at near-record lows could make payments more manageable for homeowners trapped by falling prices. Though many of these owners are current on their payments, plummeting prices have kept them underwater. Homeowners whose mortgages were bought or guaranteed by Fannie Mae or Freddie Mac typically need equity of at least 20% to refinance. Obama's program would change that requirement, allowing even those who owe up to 105% of their home's value to refinance.
An example of the potential savings: A family took out a 30-year fixed-rate mortgage of $207,000 at 6.5% on a house worth $260,000 at the time of purchase. Today, that family has about $200,000 remaining on its mortgage, but the value of that home has fallen to $221,000, keeping the owners below the 20% threshold and leaving them ineligible to refinance. Under the Obama program, that family could refinance to a rate near 5.16%, reducing annual payments by more than $2,300.
Allot of us may say they don’t find it fit that they have help to bailout people who purchased houses they knew they could not afford for example the buss driver who purchased a 800K house. They media have used this lady’s case as an example so many times which I totally don’t think its fare, ok yes the lady is a buss driver, and her husband is a construction worker.
If they were two accountants this would have not been a big deal, but just because of their job description they are being used as examples, just a quick reminder that constructions worker make allot more than the average college graduate with a bachelors degree that’s something that I know. These people did not ask for help they never did however they are the center of this big controversy. Sorry to go off track but I had to say that.
Do I like the housing bail out?
Anything that is more than nothing works for me right now, allot of people are going crazy talking about how they don’t think that they should bail out people who made the bad choice to purchase houses they cant afford. What I think is every one should get a bail out, those people who made bad choices pays taxes just like you, and it’s the tax dollars that will be used to repay china these loans. So it would not be fare in my view to bail those out who made the right choice but still are under water and leave those out who made bad choices.
Leaving those who made bad choices has repercussions, the whole idea of this bill is to stop the rate of foreclosure because when this happen it devalues the other properties in the neighborhood, which will put homeowner even more under water as there will be no or little equity in their homes. So to those who think they should not be bailed out, this is one reason I think they should, if you have say 20 houses in a housing complex and five of those houses were purchased by people who could not afford it, and the other 15 was well qualified buyers. The qualified buyers loose equity and the government bails them out leaving the remaining 5 to work that out on their own, what will happen is that those five houses will be foreclosed on, which will intern have a very bad impact of the values of the remaining 15 homes, because now you have gotten your mortgage refinance rate at say 5. % from the 6.5% you have it before the bail out, now the house starts to loose value once more, so you’re underwater again. Why? Simple due to the fact that the bad loans were not bailed out foreclosure takes places, the community as a whole looses value.
I know allot of people wont agree with me on this but its simple how I see it, I really want to hear you guys assessment of this bill? I wish I had time to really write more, but I am at work don’t want to get fired.