I'm not an attorney, and I may be miss-interpreting this measure in the 700 billion bailout bill, but it seems if we just stop paying our mortgages, we have a chance to get a lower interest rate and/or a lower principle on our loan. It also looks like the government will now be in the buisness of determining property value...How in the hell is this fair to all of us who actually act responsibly in paying our debts? Someone with more expertise than myself please tell me if this is how you read this.
GENERAL.-To the extent that the Federal property manager holds, owns, or controls mortgages, mortgage backed securities, and other assets ecured by residential real estate, including multifamily housing, the Federal property manager shall implement a plan that seeks to maximize assistance for homeowners and use its authority to encourage the servicers of the underlying mortgages, and considering net present value to the taxpayer, to take advantage of the HOPE for Homeowners Program under section 257 of the National Housing Act or other available programs to minimize foreclosures.
(2) MODIFICATIONS.-In the case of a residential mortgage loan, modifications made under paragraph (1) may include-
(A) reduction in interest rates;
(B) reduction of loan principal; and
(C) other similar modifications.
Yes, in the quest to "preserve homeownership" at all costs, it appears the government will be determining the value of homes directly in the marketplace - not only reducing interest rates but also loan principal.
SEC. 124. HOPE FOR HOMEOWNERS AMENDMENTS. Section 257 of the National Housing Act (12 U.S.C. 1715z-23) is amended-
(1) in subsection (e)-
(A) in paragraph (1)(B), by inserting before ‘‘a ratio'' the following: ‘‘, or thereafter is likely to have, due to the terms of the mortgage being reset,'';
(B) in paragraph (2)(B), by inserting before the period at the end ‘‘(or such higher percentage as the Board determines, in the discretion of the Board)'';
(C) in paragraph (4)(A)-
(i) in the first sentence, by inserting after ‘‘insured loan'' the following: ‘‘and
any payments made under this paragraph,''; and
(ii) by adding at the end the following: ‘‘Such actions may include making payments, which shall be accepted as payment in full of all indebtedness under the eligible mortgage, to any holder of an ex6
isting subordinate mortgage, in lieu of any future appreciation payments authorized under subparagraph (B).''
Robert asks: "Is this about renegotiating mortgage rates of existing mortgages? Did I just get screwed for paying a point to lock in 5% fixed rate when my %^&*# neighbor went with no points adjustable rate? How the hell is this fair? I want his new rate and MY POINT BACK!"
Susan McQuaide
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You seem like you are reading it correctly to me. It is not so much the reduction of interest rates that bothers me as it does the reduction of principal. In fact that was a debate question last night which Biden stated he supported but Palin I believe did not.
My husband and I moved up to a bigger house in May 06 right about the time that housing prices were starting to drop. In fact the people who bought the same new construction next to us a year later paid about 10-15% less than we did. This is not as bad as it is in a lot of parts of the country. Although I sometimes joke that we should have bought a much bigger house, ruined our credit and end up getting the house for cheaper than what we are paying now. Why are we rewarding irresponsibility?
Michelle