I had a phone call last week from a local news reporter wondering if I would be willing to talk to her about the Presidents plan for the mortgage crisis.
What did I think of it? I have several questions on the subject. What exactly is his plan? Will it be backed by the government or private industry? How on earth are they really going to determine who is eligible for it? With the majority of the mortgages packaged and sold on the secondary market to investors around the world how
is itgoing to be determined who should be eligible? It is unfortuante that this situation has caused so much pain for so many people. It seems to me that the mortgage brokers have had a heavy hand in this. Why when looking at a clients debt/income ratio are they allowing those people to get in to a mortgage that if one challenge comes up in their financial life it will turn them upside down. Retail sales have driven the economny the last few years specifically due to the fact that with the low interest rates people were using their homes as banks and spending. Good times don't last forever ... at some point the party has to end. If he freezes the adjustment for five years for those re-setting in 2008 what is going to happen then? In theory it sounds good but it seems to me that the reality of it really working out to the benefit of everyone in this mess is a stretch! It has been talked about that in March, 2008 Fannie Mae and Freddie Mac will require 20-30% down and for those with a credit score less than 680 they will either pay additional fees and or an adjustment in their interest rate. When we purchased our first house it wasn't even an option to think about buying without 20% down. It will be interesting to watch the President's plan unfold and how it helps the situation we are in. We need a solid plan in place for a long term resolution for the sub-prime situation.
;)
;)
