What happened around me is MANY people cashed out the equity right at about the height. So, they cashed out and made a quick 150-200k.
And what did they do? Did they modestly upsize? Nooooo, they went balls to the wall buying 700, 800 and 900k homes.
What happens in that case? They get the loan reset and live in their McMansions close to mortgage free?? (not that they'd ever have that sort of impulse control)
The problem is the 300 lb gorilla in the corner no one wants to talk about. Most people can not stop spending. They are credit addicts. They aren't victims, they are the problem. In the majority of cases.
I am just posting the plan. I am not sure where it is outside of normal business. Is it not better to have a paying loan versus a forclosure? I am not sure why the government would be involved minus the FHA loan. But those exist already? If someone could figure out what the government is putting into the deal in terms of money, that would be a good piece of info.