Will new mortgage relief plan help?

What do you think of this latest plan for mortgage relief?

The Obama administration will announce Friday a plan to reduce the amount some troubled borrowers owe on their home loans, Associated Press is reporting.

The effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, AP writes. It would be funded by $14 billion from the administration’s existing $75 billion foreclosure-prevention program.

The plan also will require the more than 100 mortgage companies participating in the administration’s existing foreclosure prevention program to consider slashing the amount borrowers owe. They will get incentive payments if they do so.

It also will include three to six months of temporary aid for borrowers who have lost their jobs.

Will this help you avoid foreclosure?

Should the government be doing this?

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71 comments Add your comment

shaggy

March 26th, 2010
6:22 am

More aid for the ones that made poor choices, paid for by taxes on the ones that made the right choices.

@ reform??

March 26th, 2010
6:28 am

I agree, Shaggy. What about those of us who have been paying the entire time? Where’s our break? Now, I’m not talking about those who have lost their jobs due to this awful economy. I’m referring to those who bought a house beyond their means and now can’t pay.
This is now becoming what we can expect from the Robin Hood administration. Blah!

Grumpy

March 26th, 2010
6:47 am

The term “moral hazard” comes to mind. Why pay if the nanny state will bail me out?

Bob

March 26th, 2010
7:02 am

Obo spreading the wealth around. Are any speculaters going to get helped with their gamble ?

Bubba

March 26th, 2010
7:04 am

Another handout to the moochers. Better hide your wallets till this clown is out of office.

TMONEY

March 26th, 2010
7:13 am

Wow.. really!! Are you guys really that disillusioned that you think its a hand out?? Its temporary help for the unemployed.They will still have to pay.. its just back loaded onto the loan.

Gus

March 26th, 2010
7:21 am

If it really comes to pass, it will help me and I will be grateful. However, I’m $40K underwater…I doubt the government or the bank is going to swollow that. I consider myself a responsible homeowner who pays my bills. When I refinanced, i was making a good faith effort to improve my home and consolidate my bills….now I’m screwed. There have been 5 forclosures on my street and probably dozens in my subdivision…Why do I now have to suffer for those who acted irresponsibly?

Rick

March 26th, 2010
7:25 am

I am not for more government by any means but… there are people like myself who have homes that are not worth 60% of what we paid for them. That would be ok if I weren’t possibly trying to sell and relocate for a job. This plan may be able to help someone like me. My only problem with these plans is that you really have to have the help of a lawyer to get anything done. No one can dicifer all of the mumbo jumbo that you have to go through to get this plan. The banks and mortgage companies sure won’t help.

Annie

March 26th, 2010
7:32 am

The government definition of “through no fault of their own” is the scary part….this administration is scary.

JohnnyReb

March 26th, 2010
7:33 am

Suspending payments with the TARP funds used to pay the interest would be a better plan than forgiving loan amounts. That would give people who are trying to overcome the hardship an opportunity to get on their feet. But even that must have an end. Forgiving loan amounts is wrong by any measure just as putting Unions ahead of bond holders was wrong in the GM mess.

Lynn

March 26th, 2010
7:34 am

Who is John Galt?

Hosed

March 26th, 2010
7:36 am

What ever happened to the American ethos of the rugged individual that built this country. I don’t know which is worse, the corrupt politicians who come up with these programs that take money from the producers to buy votes or the pathetic non producers that have lost their priniciples and take it. Either way America is in a steep decline.

Van Jones

March 26th, 2010
8:00 am

Gus and Rick, do you look around for someone to help everytime anything goes wrong? You two need to man up, grow a pair and get off the goverment teet!! You took a calculated risk and got the shaft… it happens every now and then – live with it. But don’t come to me to bail you out.

David

March 26th, 2010
8:26 am

This plan is a big steaming pile … real estate is gambling and there is no guarantee the value will increase in the short term. My house is nowhere near the value I had hoped but I shopped and bought at a good price, made my affordable payments,

WTF should my taxes help those who made poor choices. I really don’t care that the banks offered “get rich quick” mortgages to put you in a house that you had no business buying. Ultimately it was your decision to sign.

Bob

March 26th, 2010
8:26 am

Yes! I bought my $400k home, couldnt really afford it, but it was good deal and I wanted to sell it anyways in a few years. I took out a 100% interest only loan, not it is $100k underwater. I have no equity in it, so walking away would make sense. Hopefully this new plan will erase close to $100k in principal. Maybe then I could stay. All you other idiots complaining, what would you rather have, a foreclsoure next door to you, or allow me to get the prinicpal adjusted? Thats what I thought.

David

March 26th, 2010
8:31 am

BOB how can you say something that you can’t afford is a good deal? Did you have a straight face when typing that?

Gerry

March 26th, 2010
8:50 am

What about me? Where’s my bailout? I have behaved responsibly regarding homes (3 times now) by always buying LESS than I was told I could afford. I have turned down numerous offers to borrow against equity. I have shredded countless credit card offers. In short, I have lived well within my means. I have a credit score of 840 and no credit card debt nor is there a car payment. Still and all, I would be a lot better off if someone would “forgive” 25 – 30% of my mortgage balance! Am I ‘underwater’ on my house? No, but why should I be penalized for behaving in a fiscally responsible manner while others get their home loan principal reductions and their payments lowered? I am still in shock that this is even a serious suggestion!

contributing tax payer

March 26th, 2010
9:04 am

When we bought our home, we were approved for a 580K home. I ran the numbers and figured the most we could safely handle (and eat) was a 330K mortgage payment. So thats what we did. Guess what? No issues here. The problem here is that bad choices were made and now the taxes paid by the good decision makers are being used to bail out the bad decsion makers. I have no problem with restructuring a loan but ” The plan also will require the more than 100 mortgage companies participating in the administration’s existing foreclosure prevention program to consider slashing the amount borrowers owe. They will get incentive payments if they do so.” That’s a hand out. That’s like giving the girl scout that sells the most cookies nothing while giving the one that ate her cookies the $$$$$ generated from the girl that sold the most! ALL OF OUR HOMES ARE WORTH LESS!

david

March 26th, 2010
9:08 am

Right or wrong? The majority of people buying a home are making the most major business deal of their life AND one for which they are not at all, or poorly, qualified to do in terms of education, training and experience.
Regardless, they are no more entitled to principal forgiveness than you or I are
to a 50% discount at the gas station!
May be principal reduction for some equity position for lender. But who asked me? I only have 35 years industry experience and an M.Sc. in macro economics.

Erica

March 26th, 2010
9:34 am

Obviously, all of these self righteous posters are either still employed or have very large savings accounts (i.e. enough to pay all of their obliagtions to infintity and beyond). Fiscal responsibility is all well and good, as long as you have a source of income that is available to meet your financial obligations. Here’s the clincher…what happens when that income source stops (i.e. due to unemployment)? Even the most fiscally responsible person will undoubtedly be affected in this cirumstance. I am weary of hearing all of the propoganda and lack of empathy for those whom this economy has adversely affected. Everyone is not on the take, or on “welfare”. A lot of hardworking, earnest, honest folks have lost jobs, which has forced them out of their homes, which they were probably able to pay for as long as they worked. Before you sit on these lofty seats of fiscal judgement, ask yourself, “How would I survive if I were to lose my job or exhaust my savings?”

These are the people who will most benefit from some assistance with their mortgages. And guess what, if these folks are able to get back on their feet and stay in their homes, our collective property values will eventually come back up.

Have some compassion, people!

Van Jones

March 26th, 2010
9:44 am

Erica, do you still have a job? If so, you are more then welcome to send any amount of money you would like to anyone who has lost their job… I would rather save and spend on my family.
If you don’t have 6-9 months of living expenses saved then you are gambling by living on the financial edge. Show me someone who did everything right and still got smacked and I will show some compassion. Remember, you reap what you sow (so please sow with some common sense and forethought)!

AutoNumb

March 26th, 2010
9:45 am

We need something like this for the auto loans…. I am 10K underwater on my car loan… where is my help??

ugaaccountant

March 26th, 2010
9:46 am

This is still not a good plan, but it appears at first glance to be slightly better written than the last version of this plan, in terms of getting the money to the right people. Nothing “new” to complain about here, because we all knew that once this money was earmarked for this program, Obama and Co. would keep going until it was spent. Or maybe like cash for clunker they will ultimately add even more of our hard-earned tax dollars into it.

ugaaccountant

March 26th, 2010
9:47 am

autonumb – I’m assuming this is a sarcastic post, but if it’s not here’s a clue, the vast majority of auto loans are underwater all the time. Good economy or bad economy. It’s never been a good idea to sell your car before you pay it off.

Shar

March 26th, 2010
9:51 am

Erica, I lost my job to the recession and have yet to apply for unemployment benefits, preferring to use savings and skrimp. My kids have come home from out of state colleges and now go to community colleges instead. My home is worth much less than it was two years ago but I am hit with big increases in assessments and millage rates to pay for overspending by the City. I paid it off when I was employed and now just gasp my way through the absurd tax bills to pay for bad decisions by the government. Those taxes pay to fund other people’s health care at Grady, which I also pay for in direct aid – Medicaid/care- and indirect aid – cost shifting to load my private policy to compensate for underpayment by the government. I CANNOT ADD YOUR HOUSE TO MY LOAD. Sell, walk away or go rent.

ZZzzzzzzzzzzzz

March 26th, 2010
9:59 am

The Government has as much business getting involved in this as they did forcing banks to give loans to people who couldn’t afford them in the first place.

Erica Please

March 26th, 2010
10:03 am

Erica – I have been out of work for almost a year now and still have no problems with any of my financial obligations. Do you know why? Because I did the responsible thing and saved up over 12 months of living expenses before buying a house. I waited to rent until I could responsibly purchase a home. I have taken up a part time job making basically minimum wage to make sure I don’t go through my (emergency) savings too fast while I continue my job search. At this rate, cutting back on unneeded spending, I can survive another year without exhausting my savings. So what’s my point? You shouldn’t be living paycheck to paycheck and if you can’t buy a house without doing so, then that means you can’t afford to buy a house. That seems a little harsh but it’s just the facts of personal fiscal responsibility. And this doesn’t even address the government program. Over 50% of all homeowners that took advantage of the last government sponsored mortgage adjustment are delinquent again. These programs only treat the symptoms, not the disease (financial irresponsibility).

tom

March 26th, 2010
10:04 am

Jim Cramer said a year ago that cramming down the principle on underwater loans would fix the mortgage crisis fast and he was right. As for handouts, the banks took billions from the government put it in their pockets, paid fat bonuses to execs and did nothing to increase lending. At least this gets money back in the economy and get some spending going. Here in SoCal many areas home values have fallen 50%. For many people who are that far underwater, walking away makes financial sense rather than continue to make payments on an asset that may never recover it’s value. More foreclosures aren’t good for anybody. This makes sense.

peter m.

March 26th, 2010
10:04 am

First – the gamblers (who could not qualify for their loan) got the money from their greedy bank, and moved in. Second – now they’ll get another break, by having their principle reduced. So they benefit twice, while we the honest payers pay for it both times. First through
the bailout, second through this great new program. Just lovely.

LivingLarge

March 26th, 2010
10:08 am

This is great news. My house is underwater due to multiple cash-out refi during the past 8 years. I have great cars, and numerous vacation memories from the money spent. Where do I signup for the principal reduction? Wow, the responsible just keep giving & giving! What happens the well is finally sucked dry? Given the massive support for the banking industry during the past two years,,,,where is my return as a taxpayer!

Mike R

March 26th, 2010
10:13 am

I can’t wait to see this plan. I can afford my payment because of savings, but I am $400,000 upside down. If my taxes are going up for the next 20 years to pay for everyone else maybe I should take advantage of a bail out also.

KA

March 26th, 2010
10:17 am

Erica, I am a bankruptcy attorney and have a lot of compassion for anyone who has fallen on hard times. However, this is largely a nation of greedy sheep with social status anxiety who want to have it all, and have it now, and think borrowing and living on credit is just fine. You are doomed to fail if you have believed what the government, banks, real estate agents, and neighbors and family have told you that is acceptable to live beyond your means on credit, to speculate and borrow too much to “buy” more house than you can really afford, and to buy cars, furniture, clothes, college education ALL on CREDIT. If you don’t have six months of salary in savings, and don’t pay as you go, and then you lose your job and can’t keep up with all of those credit payments, well guess what you are the only one responsible at that point. Failure to plan is to plan to fail. My husband and I only mortgaged half of our smaller home we built 26 years ago; paid off the mortgage in 15 years; paid cash for used cars and drove them until the wheels fell off, paid cash for furniture and clothes, and SAVED money and put our three kids through college. In other words we did not live on credit and we have savings. And when we started out our income was around $40K a year. The government has no money itself, as it relies on taxes paid by the citizens and businesses, and what it borrows when it sells bonds. And most of the money that the bloated federal government is spending now is money borrowed from China, who holds most of our debt. It’s time for a change, time to stop the borrowing, time to live within our means and when faced with a mistake in spending, STOP SPENDING.

Erica Please

March 26th, 2010
10:17 am

LivingLarge – some might not know you are being sarcastic. Probably the same people that created this situation.

tmz

March 26th, 2010
10:19 am

A lot of people are like drug addicts when it comes to bailouts and such, thats why a lot of drug dealers give you your first few hits for free. Once you are hooked its not free anymore and they have control over you and your life. Goverment=Dealers and Addicts=Bailout Seekers.

Erica

March 26th, 2010
10:28 am

Yes. I still have a job. And yes, I am a saver by nature and have probably about a year to a year and a half of expenses saved in case of a rainy day. I have a car that is paid for. My husband and I bought a house that was below what could be afforded on both incomes. We have minimal credit card debt and live on a cash basis. In sum, we’ve seemingly done all the right things.

This is an EXTREMELY tough job market for those who are without employment. It is even tougher if you are over 40 and have substantial work experience in one area. It is not uncommon for people to be out of work for well over a year. And even the low end, labor jobs are super competitve now to get. So, there is no fool proof plan for insulating ones self and ones family if unemployment comes knocking on your door.

Not everyone bought more than they could afford. I am saddened by many in this country’s lack of the ability to empathize or give a flip about anyone else’s plight. I am blessed to be able to support my family, but I am not arrogant enough not to realize that unemployment or some other unfortunate circumstance could change all of that. I guess it will have to continue to hit and perhaps hit some of the posters on a personal level for it to become a reality.

Very, very sad state of affairs when we’re too busy pointing the blame finger rather than helping…..

Dave

March 26th, 2010
10:32 am

Will it work as well as this plan already available? :”March 25 (Bloomberg) — More than half of U.S. borrowers who received loan modifications on delinquent mortgages defaulted again after nine months, according to a federal report.

The re-default rate of loans modified in the first quarter of 2009 was 51.5 percent by the end of the year, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a joint report today. The figure, which measures payments at least 30 days late, climbed to 57.9 percent for changes made in the prior 12 months.

U.S. homeowners are struggling to make payments as depressed housing prices leave them owing more than their properties are worth. About 24 percent of properties with a mortgage were underwater in the fourth quarter, First American CoreLogic said last month. The median price of a U.S. home was $165,100 in February, down 28 percent from its peak in July 2006, according to the National Association of Realtors.

Modifications are “clearly not working well and it’s not a surprise,” said Sam Khater, a senior economist at First American CoreLogic in Tysons Corner, Virginia. “It’s pointless to rewrite these loans because they’re underwater.”

The number of homes with mortgage payments at least 60 days late climbed 2.39 million in the fourth quarter, up 13.1 percent from the prior three months and 49.6 percent from the year earlier period, the quarterly Mortgage Metrics report said.”

DW

March 26th, 2010
10:33 am

I wonder how many people that get this bailout will end up losing their home later anyway, odds are if they cant pay for it now they will not be able to later. Also wonder how many would be tempted to start using their home like an ATM again and take out a second mortage or homeowners line of credit as soon as they can later on down the road.

ZZzzzzzzzzzzzz

March 26th, 2010
10:43 am

KA: You pretty much hit the nail on the head. Not sure what people learn in the government run schools these days, but basic personal economics doesn’t appear to be in the curriculum. People bought homes that were far more than twice their annual income or bought homes without the necessary savings to endure a period of unemployment or had too much other debt to enter into a mortgage. Either way, “excessive debt” (be it personal debt or government debt) is wrecking this country. People over extend themselves out of either ignorance or instant gratification….it gets old for those that handled finances conservatively to keep supporting those who did and do otherwise.

Van Jones

March 26th, 2010
10:43 am

Erica, please give us the details on the peoples’ bills you have personally helped with… or do you just want to help using someone else’s money?

KA

March 26th, 2010
10:44 am

Erica, Tough Love is needed to wake up individuals and the government that out of control borrowing and spending has to STOP. Hard times is not unique to this time. My parents grew up in the Depression, times much worse than now. And when my husband and I were getting started the country was in a recession in the 70’s and we struggled to finds jobs, too. My husband has been with three major companies that went through major lay-offs through the 90’s and now. He’s likely to be laid off again, and he turns 60 this year. Our 401K lost half when the market blew, and our retirement plans have been put off. But we will be OK because we have a plan. That is the point. The government’s plan to spend more is just WRONG! Throwing borrowed government money at the housing problem is not the answer, it just makes the problem worse. So, Erica, quit whining about our lack of compassion. Tough Love, stop the spending, that’s the answer.

sos

March 26th, 2010
10:45 am

I’m getting to the point where I cant afford to buy beer and cigs to support my bad habits due to all the taxes on them that goes to support someone elses bad habits. I’m Mad, my bad habits come before your bad habits, WHERES MY BAILOUT.

ttt

March 26th, 2010
10:51 am

Oh great, the nobel peace prize winng leader of the free world is on the news right now talking about something else he has to save to world. Wonder what this is going to cost us the taxpayers.

David

March 26th, 2010
11:29 am

Erica, most ARE compassionate and are willing to help the truly needy, the problem is that the govt. sets up these plans that are so easily manipulated that the truly needy find it hard to get the help and the slimey get the goods.

A good stipulation on this bailout would be that, anytime in the future if the house is sold with a profit, the cramdown is returned to taxpayers … This would discourage the slimey from applying and cut some fraud while helping those wanting a place to live and reducing neighborhood decay.

That said, I completely hate the plan, but like health care it will most likely happen and ideas have to be thought of to make you vomit the least.

The Economy

March 26th, 2010
11:43 am

Boy O’boy, here’s a little diddy for yah. If you receive a loan mod or a 30% reduction on your mortgage, you will all receive a 1099 from the IRS. LMAO, sorry nothin for free. If you lived above your means, happy trails. But dont even think about credit,buying a house,buying or leasing a car,credit cards, or getting a job. Cuz ur CREDIT is trashed, and everyone will see that, NO LOAN FOR YOU!

Erica

March 26th, 2010
11:44 am

Well…all I can hope is that if any of you ever loose your health, or your jobs, or your savings accounts, that someone will have far more empathy for you than you have shown for anyone else. My grandparents were Depression survivors as well, and somehow managed to work hard (sometimes two jobs each at a time), raise and college educate three children, and own a home, that was paid for, all while living here in the lovely segregated South. And on top of that, they raised their children, who then imparted on to their children (my generation) the importance of understanding the simple tenet of “there but by the grace of God go I”. If you all have been so greatly blessed to have kept your jobs, your health, your lifestyles in tact during these treacherous economic times, then wonderful. But, I believe that we are blessed to be a blessing, so I do not sit in judgement of those who have lost their homes, but will not block assistance to prevent them from becoming homeless.

I hope that someone will be willing to help you should you ever need a helping habd. Godspeed to you!

YOU ARE WRONG!

March 26th, 2010
11:58 am

Not everyone borrowed more than they could pay. We were living just fine with both of salaries, paying our mortgage ang other bills just fine. Then the economy took a downward spiral and the bottom fell out of the home building business. My husbands was a home builder. Now he does good if can find handman work. His pay bnow is below poverty level. We are having a very hard time now paying our mortgage. So NO not everyone is at fault of having a home that they cannot afford now. We NEVER lived above our means. You nay sayers DO NOT know of what you speak. One day I hope you will eat your words and then you will now how it feels!!

Mike

March 26th, 2010
12:08 pm

Not too far in the future, an individual will be much better off
being unemployed.They will get free healthcare, unemployment and food stamps! Why work? What I would like to know is how are people going to pay for their deductibles once they are forced to purchase a health insurance policy? Presently, if a person visits a doctor or emergency room the cost is absorbed by the system.

ZZzzzzzzzzzzzz

March 26th, 2010
12:09 pm

So people who have done things the right way (lived within or below their means), paid their taxes, given to charities their entire lives, gotten knocked down and got back up again on their own, etc. don’t have empathy? Where does personal responsibility enter in the equation or does it? Continually helping others who make make poor decisions is akin to giving a crack addict more money and then turning your head on them hoping they won’t buy more crack. It’s not an “either/or” situation. One can help their fellow man by their own choice (which is what I prefer to do) and without the government becoming the middleman.

David

March 26th, 2010
12:21 pm

I am sorry “YOU ARE WRONG!” but you are wrong. If you were doing fine, you would have had a good bit of savings and would be living on rice and beans right now witing for thing to correct (which they will). Financial hardship does NOT equal dire straights.

Erica, exactly what percentage of my income would be fair that I should be forced to give to the unprepared, on top of the charity I give.

Do you and this govt. truly believe that by giving and giving and giving suffering will magically stop. Or is it possible that the more you give, the more they’ll take?

still working

March 26th, 2010
12:23 pm

Yea, we’ve got free healthcare lets have free housing now. This is great. I hope I can get this deal to. Oh wait I’m the wrong color. I’m white! I’m the one who needs to pay for all this not sign up for it. Sorry I forgot where my place was in society for a momment. I’m back now. I’ll get back work because I have lot more to pay for, that has nothing to do with my actual bills.

WOW I’m stunned by all this.