BiggerPockets

I've been listening to CNBC this morning and they have been releasing some of the plan to bailout homeowners.

It was just released an hour and half ago so the details are few and far between at this point but here are some notes.....

-Helps and estimated 4-5 million homeowners
-conforming loans owned or guaranteed by Fannie and Freddie.
-borrowers refi to lower interest rates
-no jumbo loans.

-$75 B stability initiative for at risk borrowers. Lenders need to reduce the amount on the loan to bring the ratio to 38% of the borrowers income. The government will then step in and subsidize more of that bringing the ratio down to 31%.

-Servicers to rework the loan will be paid 1,000 incentive by the govt and then another 1,000 in year two if the loan is successful and the borrower is current.

-The government will also pitch in 1,000 a year to the borrower to stay current on their loan. Effectively you get 1,000 a year if you don't miss a payment from the government. But this is only people loans who are reworked not people that have been paying and current all along.

-Government is going to double the amount of money to Fannie and Freddie so they can continue to buy up loan packages. Additional money not coming from TARP.

Thoughts......?

(This is not going to go over well here...jmo.) :D

Lenders need to reduce the amount on the loan to bring the ratio to 38% of the borrowers income. The government will then step in and subsidize more of that bringing the ratio down to 31%.

So if I bought a $3million dollar home recently and obviously can't afford the payments, Obama's going to pay up until the loan's 31-38% of my income? Is this correct? lol

Sweet deal if it is, I should of bought that beach front mansion I saw a couple months ago.... If anyone can qualify me for a $5-$50 million dollar loan, please let me know I'm very interested!!

There is no way they can get the majority of the balances down to 38-31% of income in most cases in my opinion. The reason is because so many of these loans were used with stated income...falsely stated. People said they made 100k that were making 40k and bought a 400k house.

So that person who makes around 40k can afford a mortgage of around 1,100 a month on the upper end of that ratio. Meaning a 204,000 loan.

Are you telling me they are going to write down the balance of that loan to 204 k on a 400k house?

Even if this is an extreme scenario are you really going to see 50-200k principal reductions on people that should have never owned a home in the first place?

What I wrote was probably a little sarcastic and extreme, but I agree with Dave, and I didn't see any suggested cap on the amount the government would reduce the loans by... Does anyone know if there is a cap on the amount they will/can reduce a persons loan to make it 38% of income......

Robert,

The only "cap" that I saw was that jumbos (417k +?) are not included. There has to be some cap....I would hope.

Lets say my scenario above plays out...Someone is taking a 200k loss, in this case the bank. Why on earth would the bank want to take a 50% loss on the original loan just for a couple grand in incentives from the government. I think they would rather risk the foreclosure to see if they can see it at .60 on the dollar. They would be winning in the case of foreclosure.

The other issue is how do they determine what fair market value is in this case?

You totally through out the actually house, land and market value in this case since it would appartently be based on the owners income and not market balancing factors.

When you use houses for comps are you going to use the 400k sales price this year when in fact the owner got a modification to 250k?

Are we(or agents)going to have access on the write down value of homes to justify comps?

This does nothing to stem the drop in housing prices imo....its just optics.

hahaha!

i always love richard's blunt and to the point comments.....followed by a smiley :)

What I am seeing is another "Rush Order" job. They are moving too fast to trying to make something happen.

I would be all for helping people that could prove a serious life problem that put them in their situation (medical emergency w/ no insurance, job loss, ect), but feel that a rushed "blanket" program could cause more harm than good.

While I might be naive, I do honestly think that Obama believes that he is doing the right thing. My concern is that we are throwing around Millions Billions Trillions without much preparation.

Maybe my thinking is officially outdated, but I want to see people get help people who NEED it, not just people that feel they want it.

BTW - Those of you listening to the press conference, please make notes and share them here for the rest of us.

We'll keep this discussion as a running thread of this thing....

It could make for a GREAT thread.