Thursday, February 12, 2009

Tax Dollars To Subsidize Your Mortgage Payments

Details are still sketchy…apparently, the Obama team will create an industry standard for how mortgages will be modified. So far, there is no mention of principle write-downs, just a continuation of the current policies of lower rates and longer terms to push payments lower.

The 2 big changes are these:

1. The Government will match the dollar amounts that the banks can reduce your payment…For example, if your payment is currently $2,000 per month and you can only afford $1,400, the bank will change terms of the loan to reduce payments by $300 per month, and the Government (we taxpayers) will pay the other $300.

2. Homeowners can apply, even if they are current on their payments (meaning lots more people will apply).

Reuters is reporting Obama eyes home loan subsidies in rescue plan: sources

WASHINGTON (Reuters) - The Obama administration is hammering out a program to subsidize mortgage payments for troubled homeowners who have gone through a standardized re-appraisal and affordability test, sources familiar with the plan said on Thursday.

The program would be a major break from existing aid programs, which are triggered once homeowners fall into arrears.

Under the plan being contemplated, mortgage companies would use a uniform eligibility test even before a borrower becomes delinquent, sources said.

The administration hopes the mortgage industry will soon agree to a set of standards that will allow it to move quickly to modify many home loans.