FDIC reworks for IDYMAC loans is supposed to be the model they use for the gov’t owned mortgages if there is a bailout. I read the details and it’s not much of a deal for the homeowner, walking away is better. The indymac reworks require full doc and they set the mortgage at .38 of gross income. They reverse the numbers to figure out what that payment would represent and the remainder isn’t forgiven, it becomes a lien, that they get first at sale or refi. Heloc’s are prevented because it is in the first position.
example: FB owes 500k on house worth 350k and makes 100k a year. can afford 3k a month but 3k is what a 375k loan would be (including impounds). Gov’t liens prop for 125k that they get back. FB keeps home but never builds equity until they break 500k after transaction fees. It would be better for them to walk away, pay 350k at a higher rate because the forebearance is not a gift in the current reworks, it just postpones the inevitable and forces them to “rent ” for twice the market because paying for shelter that you do not share in the appreciation is just that, “rent.”
