Stop and think about who’s really being bailed out here. It’s not the over-leveraged, credit challenged homeowner who could walk away and probably not lose any money. It’s the idiot mortgage brokers with their ‘no credit bad credit no problem’ pitch and their practice of lending money to anyone with a pulse, and the major banks who bought the mortgages who are being bailed out. They’re petrified at the idea of reposessing all those homes in a plummiting housing market and are desperate for the governemnt to save them.
It will be interesting to see if this really saves anyone or if it just buys more time.
My take is that it may keep those who have been paying interest-only or better, but will not really help those "option" buyers who have been in a negative amortization situation. Those buyers STILL face a significant reset and may end up losing the home.
Disgusting!
How so? Mortgage brokers who have already been laid off or gone bankrupt can't be bailed out. As for everyone else, this is a voluntary agreement. It standardizes what lenders will do and brings some certainty to a battered market. It's not a bailout, but some people did get lucky. That's the way it is.