Obama wants to reduce mortgages for unemployed homeowners

March 26, 2010 by · Leave a Comment
Filed under: Policy News 

This is not good news for the holders of many of these mortgage bond holders that are expecting payments from these financial instruments.  These efforts are still focusing on trying to support prices at still elevated levels.  If you want a recovery, lets these homes foreclose and have the pricing fall to fair market value which would be closer to 1.5 to 2 times the yearly income of the area you live in.

This is just punishing people who did not participate this our speculative housing craze and were prudent and saved their money to have a real stake in their home purchase.  Obama’s heart is in the right place wanting to help homeowners but if he wants to help us all, let market forces do what they do best…determine prices.

First American stated is very clear, “The problem of “underwater” borrowers has bedeviled earlier administration efforts to address the mortgage crisis as home prices plunged. Underwater borrowers now make up about a quarter of all homeowners, according to First American CoreLogic.”  Translated, this means that homes are overpriced and until the principal is reduced, they will continue to create problems for the U.S. real estate market.

Washington Post – The Obama administration announced new ways Friday to tackle the foreclosure crisis, in part by requiring lenders to temporarily slash or eliminate monthly mortgage payments for many borrowers who are unemployed.

The Treasury Department said adjustments to the Home Affordable Modification Program and the Federal Housing Administration program would help “responsible homeowners who have been affected by the economic crisis through no fault of their own” by expanding flexibility for mortgage servicers and originators to assist more people who are unemployed and who have been hit by falling home values.

“These changes will help the administration meet its goal of stabilizing housing markets by offering a second chance” to as many as 3 million to 4 million struggling homeowners through the end of 2012, Treasury said in a statement. It said costs would be shared between the private sector and the federal government, with the federal costs funded through a $50 billion allocation for housing programs under the Troubled Asset Relief Program.

Source: Washington Post