Posted on 07/01/2009 1:18:08 PM PDT by FromLori
Via CNBC...
Obama is expanding the homeowner bailout so that underwater homeowners with a 125% LTV ratio can refi more easily through Fannie and Freddie.
Before your LTV ratio could only be 105%, because, well, as we've learned, fat loans relative to value are more likely to go bad.
As many have described it, Obama's solution to the housing crisis is: more subprime loans.
Like the original subprime loans, they're really only going to work out of home prices grow rapidly over the next few years, otherwise you're looking at the perpetuation of people living underwater in their homes.
Update: Note that there's been talk of this program being expanded for awhile. HousingWire discussed it last week:
Federal Housing Finance Agency director James Lockhart, in a press conference last week, acknowledged rising mortgage rates pose an issue to the agency refi program. “There’s a big pipeline so it probably won’t hit for a couple months,” he said. “But at some point, if we don’t see some moderation of rates, it could have an impact.”
He also acknowledged the administration is considering expanding the LTV range to cover borrowers with more than 105% LTV, although he would give no exact figure for the new LTV target.
FHFA, Fannie and Freddie’s conservator, has said applying Lockhart’s comment to the effect of 125% LTVs are eligible for sale into Real Estate Mortgage Investment Conduits toward plans for a new refi LTV limit are a misrepresentation of Lockhart’s comments.
Media reports that the LTV limit could top as much as 125% might be speculation, but the idea is catching on, with JP Morgan commentary on the mortgage-backed securities market late last week echoing the figure.
“We expect the proposal to raise the Obama refi LTV limit to 125[%] will have a minimal impact
(Excerpt) Read more at businessinsider.com ...
Government Intervention, Regulatory Policy, and the Financial Crisis
http://www.youtube.com/watch?v=xWqouBvy2sM
And the rest of us who did things reasonably and who live within our means will PAY FOR THIS HELP to those who DIDN’T.
And the rest of us who did things reasonably and who live within our means will PAY FOR THIS HELP to those who DIDN’T.
They may be underwater but a roof over your head is a roof over your head. When inflation hits, which it will have to sooner or later, the loan will eventually be good. In the meantime, the house could sit idle and rot.
Only complaint i have is that maybe making “cram downs” to 80% LTV in bankruptcy court would work better.
parsy, who figures people still need a place to live.
Hmm... What about those of use with a LTV of 160%? And that is assuming the property would appraise at the higher end of the current range...
Sure, but make the new loan non-dischargeable in bankruptcy, like a studen loan.
What about people who get struck by lightning at work and have the insurance company most synonymous with bailouts and huge executive bonuses deny without notice their medical and indemnity benefits?
I’ve paid over 60k in property taxes alone in the last 5 years.
Am I a bum too?
I’d love to get on Hannity or something and let people know how bailout recipients can behave so cruelly and get away with it.
I don’t have a left-wing bone in my body and am here to tell you not everyone in trouble is a good-for-nothing loafer looking for a handout.
Good idea. I think something like that is already in place, as I read somewhere (dammit) that there was a HUGE caveat to doing one of these re-fis. Somehow, I can't see the govt being that clear-headed, but the news seemed solid.
My thoughts exactly. We bought a smaller house than we needed and have stayed ahead of the payments. We pay our taxes on time. We keep our credit cards paid down. We have never been a burden on anyone and never plan to be. But now, we are expected to finance the mistakes made by irresponsible people? These people are making things real difficult to raise kids to believe that they should make their own way and be charitible when the govt makes us be charitable at the end of a gun (IRS). Forced charity is not charity. It is extortion. So where is the incentive for me to pay my way and be responsible? Oh wait, I forgot. I am a white, middle age male, veteran, and a practicing Catholic. I don’t qualify for anything but the DHS catagory of a domestic terrorist. Thanks MSM for bringing us this obamination.
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