I very much doubt that this is DOA. The Gov will insure upto 300b or so in morgages at 90% of CURRENT value assuming full doc strict underwriting.
There are just too many people accross the country crossing their arms and saying “well, the Government needs to do SOMething”, not really caring what that something is. All they know is that their 401k is down, their kid just getting outa college is haveing trouble getting a job, Gas prices are finally just not worth the SUV ‘safety’ premium, and the news sounds like their jobs might be in jeapordy. And dont get them started on grocery shopping. (BTW- When the hell did “the GOV needs to fix this!” become the way we deal with challenges?)
The banks are “not” (BS!) being bailed out cause they will have to write off about 25% of the loan (15% current houseing decline nationally, +10%) instead of the…. what?…… 30-55% a foreclosure would cost. They will dump the worst of the worst, take their licks, and call it a bottom.
A few issues I dont know the answer to:
1) Does the Homeowner sign up for this, or the bank? Why would the banks sign up anyone cept those that already starting to fail?
2) Is there a window of oppertunity for this, or could my kid (I am unmarried, no kids, no plans; for time frame purposes) get into banking and take advantage of this?
3) How does this end? or is it just another corner of a GOV that is forgotten till the next bubble pop. There will be jobs, managers, directors, loan officers, computers, offices, support staff, all employees of the USA and so basically unable to be fired. What happens to these people as housing turns?
4) How does it address current value? Who’s appraisal counts? How old can it be? (have you seen the range of values seen on the houses TG posted in the Tem&Mur thread? Can you say “Missed it by ‘THAT’ much!”) We need to worry about appraisal inflation again as banks will remember who helped them keep as much capital as possible and who didnt.
5) Is there a limit to the bailout, or can anyone get one? I paid 2M for a house in 2006, now I cant afford it, and its only worth 1.2million. Can I get a loan for 1.08M and call it a day? If so, WOW! (hasnt happened yet in SD, but may be an issue in Hawaii and FL)
6) Do people who lied to get the loan get to play too?
