A family member of mine bought a place which has dropped nearly 70% now and I think for them, they should just walk away actually, but if they wanted to lower their interest rate from 6% to 4%, heck, give it to them…It’s wiser for them to actually walk away though. I don’t see how doing this “hurts” you when they can use that money to buy goods, travel, etc…to boost the economy.[/quote]
Any government handout has the same effect. Why should this group be favored?[/quote]
Because the current situation has the same reverse negative government affect. Some folks simply can’t refinance due to how the “system” is setup currently.
The whole mortgage market is mostly sold back to Fannie and Freddy and they have a set guideline of who can refinance. These folks mostly fall in the W2 employee class with a certain income ratio with downpayments, savings, etc…and other characteristics.
There is really not much analysis if they can really pay their bills and for someone who can already pay their bills at 6%, they should have an easier time to pay that same bill at 4% right?
It’s not so much a handout (since they can already pay the bill) as so much a spotlight on how the refinance market is f*cked up currently for a large number of folks so instead of saying they are getting a handout, they are getting what most regular w2 folks can get.
I suppose similar to the unemployment insurance thread, unless this affects you personally, you really can’t understand how messed up this refinance thing is (we’re self-employed).
At least knowing the government, they’re throwing everything at this so there’s hope yet for responsible mortgage folks to get a lower rate.
Thinking back more, I think what is/was annoying about this is that we also came in and put near 50% down to even qualify to buy so we had plenty of “skin” in the game to lower the risk for the lender.
Take a step back and think about this. Is you had a home to sell which was a mil and someone had 500k to put down, would you finance the other 500k knowing that if they don’t pay, you keep their original 500k down-payment and get he house as well? Heck, the bank should WANT you to not pay to make 50% right off the bat by foreclosing on you and taking the house back. This is why the refinance/mortgage market is messed up and folks like that shouldn’t be penalized on a refinance.
