If you are one of those irresponsible borrowers who bought houses at greatly inflated prices despite numerous warning that the housing market would tank . Obama will reward and help you.
If you are lending institution who made these bad loans, who took appraisals that were not worth the paper they were written on, Obama will reward you too.
If you played by the rules, did not buy anything you could not afford, did not use your home like an ATM, Well, you get to pay for all this!
One must wonder if Obama talked to anyone in the mortgage lending or real estate industry in coming up with this flawed plan.
If you are an irresponsible borrower:
You get to refinance your house for what it is worth now.
You will get a rate less than your credit score would normally allow you to get
You get rewarded for paying on time 5,000! in total!:
To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
If you are a Bad Lender you get:
Pay for Success Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive pay for success fees – awarded monthly as long as the borrower stays current on the loan – of up to $1,000 each year for three years.
To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind
To encourage lenders to modify more mortgages and enable more families to keep their homes, the Administration , together with the FDIC , has developed an innovative partial guarantee initiative. The insurance fund, to be created by the Treasury Department at a size of up to $10 billion, will be designed to discourage lenders from opting to foreclose on mortgages that could be viable now out of fear that home prices will fall even further later on. Holders of mortgages modified under the program would be provided with an additional insurance payment on each modified loan, linked to declines in the home price index.
Fannie and Freddie get Billions but are not required to stop dumping the existing foreclosures they hold for 5-10 cents on the dollar on the market driving your home prices down even further!
Most people conservatively predict that home prices will decline an additional 15 percent this year. But no one knows how much further the dumping of property by Fannie and Freddie could add to this decline percentage. Some believe it could add another 5-10 percent to the decline.
For you new home buyers Obama is giving you an 8000.00 tax credit for buying a house. Lets say you buy a 100,000.00 house you get a 8000 tax credit however in a year when you take that tax credit you house will only be worth 85,000.00 meaning you lost 7000.00 and you are now upside down on your new purchase!
Welcome to Obamanomics.
This plan will not cause an increase in new home construction, it will not result in an increase in home sales (other than existing foreclosures) and it will eventually burden those of us who were responsible with higher taxes to the Feds to pay for all this and higher taxes locally , because local property taxes rates, will have to go up to compensate for the decline in home values