Congressional Budget Office estimates that the bill will help approximately 400,000 borrowers with an average loan amount of $170,000 between now and 2011. They are expecting a 25% foreclosure rate among existing alt-a and subprime loans for owner-occupied houses and a 20% program participation rate among those headed for the foreclosure. To be on the safe side, the bill is written to allow FHA to back “up to” 300b in new mortgages, but they think that the limit is very unlikely to be hit.
Mortgages to be purchased are probably worth 25 cents on the dollar on a good day.
Huh? We’re at least halfway out of the bubble, new mortgages would be full-doc and for up to 90% of market value the moment of issuance. Why would these mortgages be worth 25 cents on the dollar.
