Home › Forums › Financial Markets/Economics › Low Mortgage Interest Rates For Everyone!!!: U.S. May Back Refinance Plan for Mortgages
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moneymaker.
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September 1, 2011 at 6:47 AM #727727September 1, 2011 at 6:47 AM #727879
jpinpb
Participant[quote=Jacarandoso]Email from a squatter applying to rent from me.
“Unfortunately/Fortunately we found out yesterday our foreclosure date has been postponed from Sep. 14th. So we won’t be needing a place to rent yet. It will also give us time to save more money to fall back on. I’m sorry for wasting your time, but please let us know if it is for rent again in the near future. We would definitely be a good fit there.”[/quote]
Please let me know if I can possibly waste your time again in the near future.
Nice.
October 24, 2011 at 1:31 PM #731236joec
ParticipantArticle from WSJ on the “NEW” proposed refinance plan today.
http://finance.yahoo.com/loans/article/113695/home-lending-revamp-planned-wsj?mod=loans-home
We’ll probably try to refinance soon as I clean up some of our accounts/credit items to prepare to refi if even possible.
Downside for us is we’re self employed and we’ve had some years where we dump a lot in retirement and try to keep income low for tax reasons which is a negative against us obviously.
Unfortunately, we’re probably in the minority here in supporting this.
We’ll see how this all plays out!
October 24, 2011 at 1:55 PM #731237briansd1
Guest[quote=joec]
Unfortunately, we’re probably in the minority here in supporting this.
[/quote]
I support this also.
The people who need to lower their mortgage rates the most are those who for some reasons or another cannot refinance.
A good way to help the economy would be to automatically give the lowest fixed rates to homeowners who have been making their mortgage payments on time for the last 12 months.
October 24, 2011 at 2:03 PM #731240NotCranky
Participant[quote=briansd1][quote=joec]
Unfortunately, we’re probably in the minority here in supporting this.
[/quote]
I support this also.
The people who need to lower their mortgage rates the most are those who for some reasons or another cannot refinance.
A good way to help the economy would be to automatically give the lowest fixed rates to homeowners who have been making their mortgage payments on time for the last 12 months.[/quote]
Will it cost more to finance/refinance people who are not underwater, and can go full doc’s, than it does for these newly rescued upside down borrowers who get weakened underwriting standards?
October 24, 2011 at 2:42 PM #731241Guest[quote=Jacarandoso]
Will it cost more to finance/refinance people who are not underwater, and can go full doc’s, than it does for these newly rescued upside down borrowers who get weakened underwriting standards?[/quote]That’s besides the point. It’s not a question of “deserving” or not, but a question of getting the economy growing.
If we automatically give underwater homeowners the lowest rates, we greatly improve their incentives to stay in their homes. If they walk, the housing crisis will continue on. 1/3 of San Diego homeowners with mortgages are underwater.
The mortgage crisis is our Greece problem. We need to swallow the bitter pill and do what’s best for the economy as a whole.
October 24, 2011 at 5:36 PM #731248SD Realtor
ParticipantConfusing the mortgage problem with an insolvency problem is incorrect Brian.
I am somewhat torn about this proposal. I do see merit in putting money in homeowners pockets by lowering the rate at which they are paying which essentially is what this proposal is doing for qualified homeowners who are underwater.
However this by no means is solving the problem. In fact it is more then likely perpetuating it. The solution is actually rolling back safegaurds that were put in place because of the bubble. Mortgage originators now can no longer be held responsible for an incorrect appraisal. In fact, I do not believe they will even be appraising properties that are going to be refinanced under this program. Thus a loan is being made on an asset that we know is much less valuable then the loan.
Doesnt that seem wrong to anybody?
Furthermore the GSEs are going to back the loans. Ultimately that is taxpayer money.
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What else is happening here? Well we are now going tens or hundreds of thousands of refinances, maybe even millions to people.
Guess who makes money on refinances? Those evil banks if I recall… Is that correct? CAR care to chime in?
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Finally, we are once more promoting a society of consumption and strapping people to debt. The debt has not shrunk, the overvalued asset is still highly overvalued, and the loans on the books although they are at a lower rate, in no way do they represent the value of the asset. So essentially instead of trying to encourage the society to live within their means we are doing the opposite.
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The problem is a solvency problem and until liquidation occurs, the problem will persist. In fact, the real solution would be to do the opposite which would be to let the foreclosures run their course, and perhaps not punish people for indeed walking away. If all that time and money we have put into bailouts, affordability programs, shams and backroom deals, and all the other things we don’t even know about, was rather put into a focus of figuring out how to perform an orderly liquidation then THAT is how you build a foundation of a strong real estate market. This would be a monumental task and perhaps it is impossible.
However swallowing the bitter pill involves liquidation.
Again I am not saying this proposal is entirely bad… It has some merit but in reality the underlying asset is overvalued and the banks will make a killing off of the refinances. That doesnt sit well with me.
October 24, 2011 at 5:43 PM #731249Participant[quote=briansd1][quote=Jacarandoso]
Will it cost more to finance/refinance people who are not underwater, and can go full doc’s, than it does for these newly rescued upside down borrowers who get weakened underwriting standards?[/quote]That’s besides the point. It’s not a question of “deserving” or not, but a question of getting the economy growing.
If we automatically give underwater homeowners the lowest rates, we greatly improve their incentives to stay in their homes. If they walk, the housing crisis will continue on. 1/3 of San Diego homeowners with mortgages are underwater.
The mortgage crisis is our Greece problem. We need to swallow the bitter pill and do what’s best for the economy as a whole.[/quote]
This is what I’m having trouble understanding. Obama was in Vegas announcing this new plan. Homes there are easily 50% off peak. Say you are one of the few people who didn’t succumb and walk away over the past few years, were lucky enough to keep your job and made payments, but you’re still 40 to 50% upside-down, I just don’t see how refinancing to 4% is going to help you much. You are still paying on a very overpriced home.
Seems to me they are trying to make sure you continue to be a mortgage slave. People in Vegas may be waiting quite a while to see peak prices come back again. Let’s face it. There’s even places in SD that are looking at 30% off peak. And, of course, this plan probably isn’t going to help investors and those buying back then to flip and/or people w/second homes. This plan is a little late, if you ask me. Quite a few people strategically defaulted and many have missed a payment of the past year, much less 6 months of not being late.
October 24, 2011 at 8:05 PM #731253patientrenter
Participant[quote=briansd1]
….That’s besides the point. It’s not a question of “deserving” or not, but a question of getting the economy growing….[/quote]You advocate an interesting world, brian. So let’s apply your principles consistently, shall we? Hand over all your assets to me, and I promise to stimulate the economy.
I hate to take anything from you, brian. I don’t deserve it. But we all have to do whatever is best to get the economy growing, you know. LoL!
I think we have had too little accountability and responsibility. Between bailouts for Wall Streeters and for homeowners, we have had enough. We aren’t going to have a healthier economy in the long run by encouraging bad behavior, nor matter how good it feels in the short run.
October 24, 2011 at 8:09 PM #731254sreeb
ParticipantWill refinancing an underwater house get you a brand new non recourse loan? These might not be that great a deal if you loose the option to default.
October 24, 2011 at 8:40 PM #731256Participant[quote=patientrenter][quote=briansd1]
….That’s besides the point. It’s not a question of “deserving” or not, but a question of getting the economy growing….[/quote]You advocate an interesting world, brian. So let’s apply your principles consistently, shall we? Hand over all your assets to me, and I promise to stimulate the economy.
I hate to take anything from you, brian. I don’t deserve it. But we all have to do whatever is best to get the economy growing, you know. LoL!
I think we have had too little accountability and responsibility. Between bailouts for Wall Streeters and for homeowners, we have had enough. We aren’t going to have a healthier economy in the long run by encouraging bad behavior, nor matter how good it feels in the short run.[/quote]
I think I deserve to pay my house off with credit cards and then not pay the cards off.
October 24, 2011 at 8:45 PM #731255ParticipantAs I understand it or hope how this will eventually work, there is no re-appraising your home as SDR posted about. If your overpriced LV home WAS worth 300k and now, 150k, it’s still appraised at 300k (or whatever the tax rolls say it is), you just get to lower your interest rate (assuming you want to, to begin with) say from 5.75 to 4.25 thereby lowering your payments. If I was in the situation where my property is down 50%, I think I’d just walk if I could. I have family that’s actually doing that now. It makes little business/financial sense to stay in a house if all you get is a lower interest rate. THERE IS NO REMOVING of principal or lowering what is actually owed, only your rate drops.
As for it being “wrong”, the problem is the GSE ALREADY OWNS every loan that this program would qualify for because they already own the loan to begin with.
I really don’t think this program is for folks who are 50% down or some of what people are posting about and folks that are like that should probably walk and not pay for an overpriced asset.
This is for folks who “want” to stay in their homes, HAVE been paying a higher rate on the value of their house/mortgage, and is OK that their home is down 10% or whatever, but want to be able to refi when previously, they couldn’t due to a list of reasons because the mortgage market is messed up. This could be like the article says, someone had a loss on a part-time biz which isn’t even their primary job, self-employed folks, folks with massive assets, but lower income due to time off for family, folks who put 20 or 30% down or whatever, but now, with valuation drops, only have 15% equity and can’t get the best rates…you name it.
The hope is that with a lower monthly payment, these folks who have been responsible with their payments/mortgage will use the money to help the economy a little by shopping, traveling, spending, etc…
A lot of economist like this proposal because it doesn’t add to the deficit and can stimulate the economy by putting more cash in the hands of people who might use it.
Also, if FNM And Freddie already OWN these loans to begin with, I am guessing, but assume they can call the bond investor’s note and re-issue them a new note if they want (the bond investors are the ones getting screwed here and who I see as the “l00sers”). However, the upside is that if the home owner has a lower rate/payment, they are less likely to default so the payments are more secure…Then again, if the GSE own the loans, then maybe that’s their right.
We’ll see what happens, but I don’t think this proposal “hurts” folks without mortgages as much as people make it out to be.
I hate big banks too, but you sorta need them unfortunately and more bank jobs for this, more people who will spend to eat out, etc…
October 24, 2011 at 8:47 PM #731257Participant[quote=Jacarandoso]
I think I deserve to pay my house off with credit cards and then not pay the cards off.[/quote]Better yet, pay off your student loans which are near impossible to discharge with credit cards or home loans and default on those. 🙂
October 24, 2011 at 9:17 PM #731258ParticipantWhat are student loans?
October 24, 2011 at 10:09 PM #731260scaredyclassic
ParticipantGet some legal advice before trying the credit card student loan payoff. Courts often figure these things out and won’t let you discharge.
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