Fannie, Freddie may refinance at 125% (to save peoples homes)

[HoldAndBuy]

http://www.bloomberg.com/apps/news?pid=20601087&sid=avAvJacs7UcU

[joe1]

This would be so great for the States of Florida and California, where so many homeowners are upside down by a lot.

[Hoosier4life2005]

lolz... 

This would be so great for the States of Florida and California, where so many homeowners are upside down by a lot.

[sellnbama]

Joe,
So getting them even more upside down is a good thing?So is printing money to stimulate the economy.....

[christopher w]

Bama,

The reason for this is to help people who are underwater and unable to refinance to a lower interest rate. They are not able to take cash-out with this loan, but they will be able to lower their payment and hopefully be able to keep their home.

[Hoosier4life2005]

My biggest problem with all of this is that the government is artificially trying to create a floor on how low house prices will go.

Prices right now are still way above what the market wants them to be.  Ill find the link of a chart that shows house prices throughout American history (adjusted for inflation) and todays prices.

Houses are STILL very overpriced, and they need to come down.   The gov needs to stop keeping people in there houses and such, if they cannot pay.  Simple as that.

[christopher w]

Hoosier,

You make a good point however if you are already in a house and don't want to destroy your credit by walking away this program is a good alternative to help you keep the house. It does not inflate the value it only help the people get a lower rate with no MI which hopefully will help them ride out this storm.

[Hoosier4life2005]

Chris, true, but I got a ?, maybe I dont understand

If they are staying in their houses, because of this program, the price of their mortgage is still going to be really high, way above what the market wants it to be.

 If these people can ride out the storm, when they want to sell their house, they will have a horribly overpriced house, compared to other houses(because other houses would have fallen, that are not saved through this refinancing), because their house was saved through this(and the price was kept high).

Instead, wouldnt a better altervative, instead of keeping people in these overly priced homes artificially, to just let them go bad and fall back down to what the market wants to be.  This would stop houses from being artificially high, and save taxpayer dollars. (Were paying for fannie and fred)

So, this really does make houses stay high, doesnt it?  Because were saving them, and not letting them fall down to what they should be.

(this is horribly written because im in a huuuuuuuge hurry to get to a movie.) excuse it. hopefully you can understand what i mean.

[sellnbama]

The same fannie and freddie that were the root of the housing problem are more or less fixing it with the same idealogy that got them into financial ruin??If it makes sense to you,then as I said so does printing more money to get the economy going.

[christopher w]

What they are trying to do is help people stay in their homes. It obviously does not help them with the fact that their house has dropped in value, but it helps lower their payment as if it was not underwater.

Bama,

What is your alternative? Have everyone whose home has lost value walk away from their mortgage? It is the almost the same as a streamline FHA refinance which has been going on for years and has not driven the economy into the ground. They still have to qualify financially they just don't have to have an appraisal done.

[christopher w]

Hoosier,

The problem with walking away from your underwater home is that your credit is DESTROYED and you won't be able to get another mortgage for 3 years FHA and five years conventional.

[Hoosier4life2005]

I understand that, but how is that MY problem?  Why should my tax dollars go to saving somebody else?

Its this collectionism attitude, that we should all help each other, that really makes me ticked.

Hoosier,

The problem with walking away from your underwater home is that your credit is DESTROYED and you won't be able to get another mortgage for 3 years FHA and five years conventional.

[sellnbama]

So if it's so great then why have'nt regular(not govt owned)private banks done this.Wait I'll answer,because private business is there to survive and make an"obsene"profit.This is why the govt can't ever get it right,they don't understand the economics of profit=stability=job growth.
   I still can't believe they are soooo stupid in pushing 100%financing and this 125%refi.This is just sweeping a problem away that'll come back with a vengence later.   

[phlemboy]

I get the feeling that this program will not help the majority of people stay in their homes. I think that a lot of homes were bought at the height of the market by people who could'nt afford them, even with 2 incomes. With unemployment nearing 10%, many of these same buyers won't be able to help them. You can only cut the payment so much. That won't be enough to make a difference. I think the majority will lose their homes. As far as housing prices go, the prices have to come down in order to meet the income of qualified buyers or they won't sell.

[sellnbama]

Phlem,

That's exactly the problem compounded by the assualt on our economy with jobs lost.And we all know that will lead to a real bad strand of even more foreclosures.Bad decisions like 100% financing and over inflated prices(and the last election)have conseqences.