After reading through President Obama’s latest package Homeowner Affordability and Stability Plan, it appears to be a good for the time being…
- Allows for refinancing of your Fannie Mae or Freddie Mac loans even if your upside down.
- Incentivizes lenders with bonuses if lenders and servicers help you.
- Pouring $400,000,000,000.00 (billion) into Fannie Mae and Freddie Mac to stabilize their future and make them more attractive to investors.
- Incentives and rewards for homeowners who pay their mortgage timely…up to $1000 dollar paid toward your mortgage every year for 5 years!
The difficult part of the package is that outside of Fannie and Freddie…the plan is voluntary for lenders. that means that your lender may or may not play along. Are they incentivised by the program…that’s up to each lender and servicer to decide.
Because home loans in most cases are tied to some type of Wall Street Investment, it is going to take persuading these investors to look at a loan and make the decision of helping The Smith family but not The Johnson Family because thier loan is tied to a different investment tool. Sounds conveluted? It is and it’s not easy to understand.
The bottom line:
- We have more homes on the market than ever before
- More “shady” loans are set to “correct” in 2009 than in in the last 2 years combined meaning more foreclosures and further lowered prices
- We, as Americans, are in the trenches for another 3 to 5 years.
My feeling and understanding tells me that we’ll see 2 more packages by the end of 2009 that will try to salvage what is happening to our economy as more banks and investment companies sink from their poor judgment. Our large manufacturers (GM, Dupont, GE) will show their weaknesses and need to be stabilized with more of the governments help…if you read the financial s daily…you see the writing on the wall.
Kris
