You Want Fries With That House? If You Aren't Making $500k a Year, You Shouldn't Be In That Hut.
Well, the Obama administration is trying to figure out ways to both save voters money, and convert a few of those votes into re-election next year. Let's be honest.... EVERYTHING is aimed at being re-elected. Since his American Jobs Act is stalled (or at least sputtering) in Congress, Barack Obama is trying to find ways to put money back into the pockets of citizens. While we think there are ways to do it without government involvement, his Mortgage Assistance Plan falls short, for a number of reasons....
The big complaint during the Bank Bailout was that there was nothing in it for the taxpayers who had trouble affording the mortgages they signed up for. Now, the point of the bailout wasn't to save a mortgage, it was to save jobs for the millions of employees in the banking industry.. and it worked. Since then, millions of people have refinanced their homes to much lower interest rates. So, who is the plan supposed to work for?
Well, it has certain criteria: first, you have be on time with your payments for the past 6 months. Secondly, your principal balance has to be 25% or above the current market value. One these 2 points alone, this plan is a hot mess.... First off, if you are on time for 6 months in a row, you ARE current. If you are making your payments on time for a mortgage YOU signed up for, why is the Federal Government assisting you?
Onto Point Two.... The bailout occured three years ago. So, either of two instances happened: you bought a mortgage AFTER the bailout, or you overbought a house. You did it either by buying at the peak of the market - which is your fault. Or, the more likely situation, you bought too much house. If you lost value from the market drop, you are still able to afford the payment, and don't need help. You lost paper equity, not actual cash. In time, the market will go back up, and you will be in the black. If you are like so many others, who bought a McMansion with a 5 yr mortgage on a house you couldn't afford, then I have NO sympathy for you. Foreclose and move on....
Another thing to consider.. This will be a regional plan. Not everywhere had a severe market drop. Florence and the rest of South Carolina had relatively low dip - definitely not 25%. The only areas in SC that would see cash is on the coast, so if you want to waste taxpayer dollars on somebody's beach house on Hilton Head Island.... Overall, this is a bailout for the Northeast, Florida, California and Las Vegas. So, 300 million pay for helping 900,000. But that 900,000 can be the difference between winning and losing. Oh, BTW... Is Florida an important state next November?
In short, all of the criteria to qualify you for this plan already qualifies you to refinance ON YOUR OWN... That is what America is all about. Being responsible. We don't like to reward bad behavior. Sometimes, we do it anyway, but it has to end at some point. The rewards have to end. Rates are low - fix it yourself.