It's looking like many Nevada residents won't qualify for new Making Home Affordable program, as 58% are "underwater" or have negative equity; over 28% owe more than 125% of their home's value.  The federal program cuts off at 105%.  With only $75 billion aimed at zillion dollar crisis, the program was never intended to reach everyone.  As is, the program has over 1,000 pages of documentation.  (No wonder the Administration rolled out a user friendly website to help people determine eligiblilty through a few simple questions.)

To hit every situation would have made the program too comples, would have delayed it, would have made it astronomically expensive, and would have raised more ire than this one has.   As noted here a couple weeks ago in our post on the fairness of housing rescue, many people who have sacrificed to pay their mortgage or who bought a more modest home in the first place, are annoyed that they have to bale out those who were frivilous, short sightsighted, or greedy, in addition to those who might have lost their jobs or suffered some other unavoidable reverse.

There are issues though that need to be resolved, such as second loans on homes.  Half of seriously delinquent homeowners hold second mortgages.  Currently, banks that hold second mortgages and investors who own securities backed by first mortgages are arguing about how losses should be shared. If borrowers are still liable for the full amount of the second mortgage or home equity loan they will still be paying so much of their income that the new arrangement could be at risk.  Since modifying the mortgage is not the end of financial problems for most homeowners, the new mortgage is already at risk without the burden of the second mortgage debt.

Understandably, banks who write home equity loans and second mortgages don't want to absorb a total loss on their loans to assure the stability of modifying the first one!  Delinquencies on home equity loans nationwide is at a record 3.03% in the fourth quarter or 2008 vs. 2.39% a year ago; delinquencies on home equity lines of credit is 1.46% up from 0.96%.

Have a complex real estate situation?  Yonas Woldu can help.   For help with selling or buying property in Las Vegas, Green Valley, or other areas of Clark County, contact Yonas Woldu or Nebi Adhanom.