Obama's 9th Mandate, Directive, Initiative, i.e. suggestion to save the Real Estate Collapse
The Refinance Program
Didn't I blog about this one year ago? Yes, check out my link:
http://www.trulia.com/blog/JanBaron/2010/08/fha_short_re-finance_program
I suppose being a realtor, I am bias to some extent but I believe the collaspe of this economy began with the collaspe of the real estate market. So when I heard the president's speach and his only comment regarding the real estate market - making re-finances available at 4%, I thought "Here we go again."
Obama first presented this solution to the housing crisis during his campaign - Get your mortgage refinanced to 4% fixed. Remember that? I remember the outcry "What about me? I pay my mortgage, live within my means, and I'm going to be punished while those who over extend themselves with be rewarded?"
After six other housing proposals, the FHA Short Re-Fi was introduced with little fanfare. With up-side down mortgages of 50%+ almost no one fit into the restricted guidelines. With only 15 re-finances completed in the entire country, the House Financial Service Committee voted to kill it in March.
This latest re-fi proposal too will fail. Why? It is unclear, for example, whether people who are delinquent on their mortgages would be eligible or whether lenders would administer it. Remember, the banks don't have to do anything they don't want to. Investors in government backed mortgage bonds could oppose it along with Fannie and Freddie regulators.
To spur more refinancing, the government would have to encourage Fannie and Freddie to lift restrictions. Encourage? is that kind of like mandate, directive, initiative, or suggestion?
Then there is this problem, same problem, does anyone in Washington ever get this?
Many homeowners have been unable to refinance their loans because they owe more than their houses are worth, they have no income, or their credit is tarnished. Why would the banks give these people more money? They are not in the business of losing money.
Ok, so here is the growing list of plans to save the housing collapse:
Forebearance Program
Home Affordable Mortgage Plan (HAMP)
Second Lien Modification Program (2MP)
Home Affordable Modification Program (HAMP)
Principal Reduction Alternative (PRA)
Home Affordable Unemployment Program (HAUP)
FHA SHORT RE-FI
Extended Forebearance Plan
But wait! There's more. We are going to hear about a Rental Program that the Obama administration is seeking advice on from the private sector. But that's another blog.
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