Today we got to see what everyone has been waiting for. The grand plan; the end to foreclosures; and at last a bottom in home prices! Not. Hell, Cramer will probably turn bullish on the home builders and whirlpool, again.
The plan I'm announcing focuses on rescuing families who have played by the rules and acted responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or close to it; by modifying loans for families stuck in sub-prime mortgages they can't afford as a result of skyrocketing interest rates or personal misfortune; and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments," President Barack Obama said in prepared remarks.
Seriously? Skyrocketing interest rates sounds misleading, but I'm guessing that was his intent. He means their own mortgage rate has adjusted due to Pick-a-Payment, Option ARMS, etc... So we have 8,000,000 responsible home buyers who just seem to have drawn a bad hand. Oh, in that case you can just have the shirt off my back.
The plan contains two separate programs. One program is aimed at 4 million to 5 million homeowners struggling with loans owned or guaranteed by Fannie Mae or Freddie Mac to help them refinance their mortgages through the two institutions.
Just Fannie and Freddie? Thank goodness they ONLY own or guarantee half of the entire $12T market. This doesn't take into consideration how many more will be swept under the F&F rug at a later date from some defunct institution.
A separate program would potentially help 3 million to 4 million homeowners by allowing them to modify their mortgages to lower monthly interest rates through any participating lender. Under this plan, the lender would voluntarily lower the interest rate, and the government would provide subsidies to the lender.
So your house is worth less than you paid for it? So is your car. This doesn't mean you stop paying for it or in no way does it mean you must get out from under it at the expense of others. Who said home prices only go up in value? But I'm glad someone is finally throwing a bone to the mortgage service industry because they must be starving...
There are a lot of people who have fell into unfortunate circumstances and I have no problem helping others. But claiming these 8 million people were responsible is a downright lie. I suppose they've already put those 8m under a stress test as well.
