Financing in Danville>Question Details

Julie Whitmer, Real Estate Pro in Danville, CA

The Obama administration is working on a new mortgage relief plan & could unveil it soon. Do you think this would work, or end up costing us more?

Asked by Julie Whitmer, Danville, CA Tue Sep 6, 2011

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IMO, the something for nothing mentality of today's politicians is perpetuating and not improving anything. They, with their big banking political contributors, wiped out depression era banking restrictions designed to prevent just this situation, created an environment that enabled anyone to get a home loan (democrats) while they turned a blind eye to fraud (republicans). So the same corrupt fools put new laws into place that protects the corrupt status quo, and puts enough distance between them and the problem so that the people who perpetrated the problem avoid the consequences. This is the crux of the problem... avoiding the consequences.

No, the problem wont be solved with this latest round of mortgage relief because the government won't cut the proverbial gordian knot and dump the inventory. They will create some rehashed plan that protects the interests of big money investors while kicking the real solutions to someone down the road with a backbone and the courage to take the hit and just dump the inventory. Letting the non-speculators who have cash buyup the inventory for pennies on the dollar and do with it as THEY please and not how WASHINGTON wants them to.
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1 vote Thank Flag Link Fri Sep 9, 2011
That's interesting. The last plan was a refi for people who were upside down only 105%, so it was not too helpful to many folks in states with so many distressed properties. I'd like to see it work, but my experience with Fannie Mae and Freddie Mac leads me to believe that it will not be as successful as it sounds.
0 votes Thank Flag Link Fri Sep 9, 2011
The banks need to write down the underwater value of ALL homes, flatten the loan curve to only a few products and work to keep people in their homes instead of only considering this quarters profits or using govt backstops to MAKE money only when they foreclose. If done properly, this would fix the housing mess, add jobs to the economy and increase cash into the government. Foreclosing on homes and selling them at 1/3 of the value of the loan without reducing the outstanding principle for the existing homeowner to a manageable level, a win-win scenario, is not only bad business but should be criminal.
0 votes Thank Flag Link Thu Sep 8, 2011

Whether it works or it doesn't, it's an important step if they are talking about anything related to housing and home finance. A year ago, both Washington and Wall St. had conveniently separated the housing economy from the general economy as if there could be a broad recovery while housing languished. Now, at least, they are recognizing that we cannot have a recovery without a robust housing market, and they are beginning to see the light that we will not have a jobs recovery until the housing market is healthy.

For those of us in this industry who have known these things above to be true all along, we have to be optimistic. Up until this point, we have withstood regulation after harmful regulation (HVCC, GFE2010, Dodd-Frank, etc.) and if necessary, we will keep doing what we must. But let's all hope this will be a small step in the right direction.

Rob Spinosa
0 votes Thank Flag Link Wed Sep 7, 2011
I don't think so. Maybe less. How much has the government helping distressed homeowners cost you so far?

Happy funding, Rudi
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0 votes Thank Flag Link Wed Sep 7, 2011
Julie we wont know until it is put into full force and function!
0 votes Thank Flag Link Wed Sep 7, 2011
Well, from reading the news article, it looks like the govt is simply thinking about doing a reboot/relaunch on the 2 year old (Making) Homes Affordable Refinance Program, which as the article points out, has not been utilized to the extent the government had hoped. That refi program is still available - your home loan has to be owned by Freddie Mac or Fannie Mae, and you can typically currently go up to 105% of your home's appraised value. (In other words, if you owe slightly more than the house is worth, you'd be able to do the refinance.) The loan doesn't work however for people with large seconds or Helocs, or people who no longer qualify based on income and/or debt. Perhaps the new plan will allow everyone to qualify, regardless of income, debt or second liens, and perhaps the 105% loan to value plateau will be raised. The program has worked for those people who were able to refinance (saving a few hundred on your monthly mortgage is definitely a good thing!) It shouldn't cost more - the banks made money on fees they charged for doing the refis (and didn't lose money by having their homes get foreclosed), the loan agents made money by having loans to do, and no government money was spent. (Well, not counting the billions spent to bail out the banks, but that's a whole other issue...) Obama may give some details tomorrow night in his speech, and hopefully this plan will turn out to be an improvement on the existing program.
0 votes Thank Flag Link Wed Sep 7, 2011
My guess would be that whatever they dream up will cost us more. "Cost us more" seems to be the consistent theme that runs through their plans. I'm almost afraid to hear of another plan....
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0 votes Thank Flag Link Tue Sep 6, 2011
Could a bold program work? Absolutely. The challenge is how will it be funded. And who will it help. The reality as I see it is that the lenders pawned off their problem loans to investors who are now faced with taking a major hit financially. A refinance package will help these same lenders take in more fees for the refinance. And the Investors will get shorted somehow. The Investors only real choice is how they take the hit. They can either do it through a foreclosure/short sale of the property. Or, the Investors can elect to do an aggressive modification program... the costs will be significantly less, the Investors will end up with a smaller short fall and the borrower gets a loan they can afford. The only one that doesn't get a huge piece of this are the lenders who helped create the mess in the first place.

Steve Curtis
Broker / Owner
Windermere Walnut Creek
0 votes Thank Flag Link Tue Sep 6, 2011
Hi Julie,
Have not seen the program so not sure what it woud entail. More than likely, it would end up costing us more than we would get out of it.

Carolyn Zeigler, CRS
Re/Max Accord
0 votes Thank Flag Link Tue Sep 6, 2011
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