More intervention in the housing market
"The Obama administration on Friday will announce broad new initiatives to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments
Another element of the new program is meant to temporarily reduce the payments of borrowers who are unemployed and seeking a job. Additionally, the government will encourage lenders to write down the value of loans held by borrowers in modification programs…
But the biggest new initiative, which is also likely to be the most controversial, will involve the government, through the Federal Housing Administration, refinancing loans for borrowers who simply owe more than their houses are worth
About 11 million households, or a fifth of those with mortgages, are in this position, known as being underwater. Some of these borrowers refinanced their houses during the boom and took cash out, leaving them vulnerable when prices declined. Others simply had the misfortune to buy at the peak
Many of these loans have been bundled together and sold to investors. Under the new program, the investors would have to swallow losses, but would probably be assured of getting more in the long run than if the borrowers went into foreclosure. The F.H.A. would insure the new loans against the risk of default. The borrower would once again have a reason to make payments instead of walking away from a property."
I don’t really think this has anything to do with keeping homeowners in their houses, I think this has to do with bailing the banks out by taking tons of toxic debt off their balance sheets Paulson style and, more importantly, to avoid an implosion on all the outstanding derivatives. What do you guys think about this?
"This much was clear, however: the plan, if successful, could put taxpayers at increased risk. If many additional borrowers move into F.H.A. loans, a renewed downturn in the housing market could send that government agency into the red.
The F.H.A. has already expanded its mortgage-guarantee program substantially in the last three years as the housing crisis deepened. It now insures more than six million borrowers, many of whom made minimal down payments and are now underwater."
Our mortgage is through Wells Fargo and ever since last year they’ve tried twice, last time as recent as last month, to get us to sign over our mortgage to a federal gov’t loan. I don’t want it because it involves federal inspection agents coming out to the house and anything they find that needs fixed “even a crack in the sidewalk” the Wells F. person told me might be considered by the agents to be fixed. And before I get the new low interest rate loan I would have to fix everything up, even if it is a crack in the sidewalk if they arbitrarily deem. Of course I probably would need to get a another loan through Wells F. to pay for all the housing fixings (as there might be a lot that I don’t think is necessarily but they might think so considering I do have some cracks in the sidewalk, etc…). And Wells F. wanted me to sign up for a new loan through them before the federal inspection. They told me I probably will not need to other loan through them to fix up around the house but to make things expedient they wanted me to sign up for the house fixing loan so it will go through fast if the federal agents find the house does need work. So the gov’t will own my house by being the ultimate mortgage holder, plus federal inspectors looking over the house, plus Wells F. tried to pass off that the house fixing loan will probably not be necessary but let’s sign off on it just in case. lol. What a load of crock! Of course I rejected it and the Wells F., the last time they called wouldn’t hang the phone up and didn’t understand why I wouldn’t just get it since it would lower my payments. I had to tell him that the phone conversation was getting inappropriate and I simply don’t want it. I told him I don’t want to hang the phone up on him, but I consider this conversation over. He finally let the conversation die. They are definitely desperate.