[quote=spdrun]Remember those are 33,000 homes out of 6 million underwater, and this is a “last ditch” program. Past statistics being what they were, maybe 3,300 homeowners will actually get the writedown.
This is a chance for FHFA being seen as doing something while then moving forward on the other homes. And also buying some Dummyquack votes.[/quote]Yeah, honestly, when I perused over the program yesterday, the qualifications for it did not appear to fit the profile of the CA homedebtor/longtime scammer. FHFA’s $250K debt ceiling to qualify for the program will eliminate this group in CA. This is because I feel that in order to have that low of a mortgage balance today, the homeowner who took “cash out” (typically $50K to $250K in one or more transactions) during the “go-go exotic-mortgage boom years” would have had to have already owned their homes for a minimum of 15 years PRIOR to taking the cash out (purchased it in the early ’90’s, or prior).
This (longtime homeowner) group typically didn’t need to take any cash out with horrific terms because they didn’t have large mortgages to begin with, they were already well-established and had paid on their homes for ~15+ years. Those in this group who DID take cash out typically took out HELOCs in the ’90’s (when they became “mainstream”) to do home improvement projects and promptly paid them back less than one year later.
The scamming homedebtors I’m discussing here used their “fake” home equity for cars, vacations, jewelry, college tuition and to generally continue living way above their means for as long as possible. In addition, many of them “bought” homes that were way out of their league because they were able to finance them at 95-100% LTV at the time, using 1-3 purchase money loans … which undoubtedly came back to haunt them in just a few years.
The 33K will come from other states where residential RE costs much less than CA and where the typical homedebtor took out $25-50K in cash in recent years (or just bought their home at the “wrong” time and paid too much for it). And, as you said here, like several failed programs before this, this new program may very well just be election year “lip service” to appear to be helping the “little people” when it ends up only helping ~10% of its intended goal with the current POTUS on his way out.
Of course, we won’t know until a new president is installed because the first notification letters from lenders will not go out until after 10/26/16.
