We have all heard, by now, that the Fed's are considering some sort of "bailout" or assistance for home owners being impacted by adjustable rate mortgages. How will this help us here in the Antelope Valley and Southern California in general?

First off, the current proposal is to use the FHA to back fixed rate loans that would be used to replace the adjustable loans that have caused this termoil. Currently the FHA limit is approximately $415,000. This means that if your loan will be above that amount, either you come in with money out of pocket or this option will not work.

Second, if you owe more than your home is worth, a similar situation applies. Lets say you owe $350,000 on the home you purchased 2 years ago. Today the home appraises for $325,000 and you apply for an FHA fixed rate loan loan. The lender can only lend you 97% of the appraised value or $315,250. This means you need to find $34,750 ($25,000 difference between owed and appraised + 3% of $325,000) to close the deal! Now, how are you, or anyone else going to do that?

It looks good to the public. The government is helping the little guy and the children will be protected. This is NOT a solution, this is smoke and mirrors. Well, you may say, the government should do more. The only other real option is for the Feds to mandate that all banks and lending institution renegotiate their loans. Banks have been and are currently doing that right now, without Federal mandates, with one caviate, you must be able to show a legitamate hardship not just that I don't like the higher payment or we won't have money for who knows what. But, know what? If you can't make the payment of a potential modification, they won't change a thing.

If the government decides to mandate how a bank or lender does their business by modifying loans, how long will it be before it's required again, and again. Should we take the attitude that if you made your bed you have to sleep in it? The answers to these questions are not clear, but what I can tell you is that there are plenty of people that are in the situation they are in today because of their actions.

Buck up and dump the jet ski's and boat. Get rid of the huge SUV or extra car. Cut back on the Starbucks and McDonalds. Learn to live within your means. Unfortunately, most people are not willing to make changes.

Don Gockel