And yet a new Refi plan to help those who are "underwater"

Discussion in 'Wall St. News' started by S2007S, Oct 25, 2011.

  1. S2007S


    Nothing new, just another plan to help those who are underwater and owe more money than their house is worth.....of course this has to be plan #189 to help prop up the housing market.....cant just let the free market take over and let it do what it has to do, again NO such thing as failure in this world, everyone gets a bailout, stimulus, QE, TARP, and Trillions of dollars to prop up a failing one has a clue that this plan will not work either, there is no plan that help the housing market....if they just let the free market take over then just maybe will get the opportunity to see what a real housing market looks like, as I said a thousands times before the housing market is still greatly overvalued, by at least 40-50%, until housing prices fall further nothing is going to change. On top of that the cost of living is going up every single day, from taxes to putting food on your table, its out of reach for tens of millions of people. Is this "refi plan" going to work??? Fuck no its not. Nothing can help this failing real estate market!

    Obama Refi Plan is Not Housing Stimulus | October 24, 2011 | 05:05 PM EDT

    "President Obama is taking action."

    At least that's what the blog on the says today in describing the president's trip to Las Vegas.

    "We can't wait to help homeowners," it goes.

    That action consists of revamping an existing government refinance program through Fannie Mae and Freddie Mac for borrowers who owe more on their mortgages than their homes are worth, so-called "underwater" borrowers. There are an estimated 11 million of those nationwide according to CoreLogic.

    The original program, which started in 2009 and has helped about 900,000 borrowers get lower interest rates, was capped. You couldn't owe more than 25 percent more than your home was worth.

    That cap is now gone, so you can be eligible no matter how underwater you are. Fees have been waived or lowered, banks have been largely let off the hook for reps and warrants on the loans (when they are forced to buy back bad loans), second liens can be transferred and mortgage insurers will move their coverage to the new loan.

    While federal regulators and administration officials were releasing, explaining and selling the plan in Washington this morning, President Obama is making his pitch in a state where 60 percent of homeowners with a mortgage are underwater on those mortgages.

    But Las Vegas is also the foreclosure capital of America. 70 percent of home sales in August were of "distressed" properties, that is foreclosures and short sales. The number of new notices of default also surged in that month, up nearly 58 percent from July, as lenders ramp up the foreclosure machine again.

    The Obama refi program enhancements do nothing about those numbers. This plan is for current borrowers who want to get a lower monthly payment through a lower mortgage rate. Yes, it's the first plan that "rewards positive behavior," says Florida attorney and mortgage expert Shari Olefson, but it doesn't do anything for the now 6 million plus borrowers who are either behind on their mortgage payments or already in the foreclosure process. It also does nothing about all those foreclosed properties sitting on the books of Fannie, Freddie, the FHA and the big banks that still need to be sold and right now can only be sold at below-market prices. This plan does nothing to stop the bleeding in home prices.

    Don't get me wrong, it may make about a million and a half borrowers feel better about making monthly payments on an investment that will never show any return. It may stop some from walking away from their homes and mortgages. "It takes the sting out of it," one underwater borrower told me today, but it doesn't change the value of his home.

    "Unless we fix the negative equity problem, we're going to refinance all folks into lower rate mortgage, but fast forward a year or so from now and they're going to sit back at their dining room table and say, look I'm still underwater, and we may see defaults again," says Olefson.

    Make no mistake, this refi plan is an economic stimulus at best, a political play at worst. It will give some relief to a very limited number of borrowers who may have been on the edge of trouble; it does not stimulate home sales, save delinquent borrowers from foreclosure, stop the bleeding in home prices or rid the market of a suffocating number of distressed properties.

    If this is the best the administration can do, then housing will continue to struggle for a bad long time. Of course, you could argue that it is not up to the administration to fix a housing market that was crushed by Wall Street greed and a buying public that refused to heed any of the repeated warnings that home prices don't always go up. Maybe what will ultimately save housing won't be a housing fix at all.

    "What we really need for housing to recover is a) Europe to get its house in order so we don't precipitate another recession; b) a jobs package," says former assistant Treasury Secretary Michael Barr, who worked on the administration's housing bailouts.
  2. The gist of your argument is that there "should" be a free market - most of us probably agree. We also probably agree that nobody should steal and we "should" all be kind and ethical. Unfortunately the reality is that the large banks own our government to a substantial degree. They get/steal what they want. Accept reality and move on to the real question - how to adapt or assist in reforming the situation.
  3. ammo


    if we had paid off the underwater home loans in the beginning,we the peolpe,would have paid a lot less than the trillions we are at now,and the banks would have had to downsize and correct there ways,it sucks but if we just paid off the loans now(plan 1) ,we would know where the money went and how much it was,under plan 2 ,they can come up with any number they like,distribute it any way they please,my guess is that the first plan would be the lesser amount