borrowers would not pay more than 38 percent of their income on housing expenses
The devil is in the details. First you must be delinquent, then you must agree to the fine print. Surely there is some kind of government-required "payback" when someone eventually decides that they want to sell their house to a willing buyer. What will that be - perhaps 50% of the net profit (if any)?
Good luck getting "willing buyers". Who would play by the rules now, when breaking them up to this point has been so very profitable? Who would bother putting down 30% (required in my area) on homes that are still overpriced? As interest rates increase for prime borrowers, and housing prices continue to tank, when do you initiate bailout #2 for those who believe that they negotiated prematurely? Bailout #3? Can you say MORAL HAZARD?
More government genius. Have fun with the housing rebound, Washington. Should be coming in about 20 years.
I have spent three hours with my accountant in the last month making preparations for my 2009 taxes. I would venture to guess that there are MANY people in this country who are going to have a hell of a wake-up call, come tax time. I don’t plan to be one of them.