Let's look at it another way. A lot of people are upside on their mortgages. (They may even be underwater!) And for whatever reason, FHASecure is not a viable alternative for them. So, what are they to do? Walk away and destroy their credit? Put yet another vacant home on an already saturated real estate market thereby further depressing house values and the market? What happens to those who have to sell because of a job transfer? If they can't sell their current home, how will they be able to afford a new home (or even rent) at their new location? What's he supposed to do? And, if the big Wall Street investment firms and banks are entitled to relief, why not the hapless homeowner who's struggling to make ends meet? Don't get me wrong. I'm a big proponent of Government laissez-faire, but something needs to be done.

Allowing these struggling homeowners to refinance at 90% of their home's current market value brings an alternative solution to helping these people out. At the same time it helps the banks and investment firms out. It'll be less homes going into foreclosure. And, do you really think that they'll write off a mortgage for the difference between current balance owed and the new loan of 90% of the home's current market value without some sort of incentive? No, they won't. Even with them kicking in 3% to FHA, they will get a tax break, pure and simple (something that's been unsaid). They now have an incentive to help people keep their homes, help keep homes from going into foreclosure, cut costs and help (hopefully) stabilize the housing market. The only factor not in the equation is affordability. Too many people still can't afford a home today, so housing prices will probably continue to fall until that equilibrium is found. But hopefully this will help slow down if not stop the "free fall."

In essence, because homeowners will be able to refinance for less than their current mortgage and be forgiven the difference, they're "tapping into their non-existent equity" so to speak. And, they're not going to pay any income tax on that difference (at least not from what I can see). They shouldn't balk at returning that equity when they later sell the house. It's only fair that they do so. But given today's climate, I doubt that there will be much equity to hand over as houses probably won't increase much in value in the next 3 - 5 years. And even giving up 50% equity after 5 years probably won't be much after taking into account how much will be written off. Plus, also left unsaid is that the Wall Street investment firms and banks will most likely get to share in that "windfall" later on. Basically, they will take a loss now, get a big tax break for it, and then reap some "profit" later on. They're not going to lose.

These are very turbulent times, and I don't think the solutions provided are silly. This is a very serious issue for a great many people. And I for one sincerely hope that those who deserve it get the break they truly need.

That's my 2 cents.

Paul

I wasn't implying that the new program was meant to bail out someone who was transferred. It was meant in the context of and to imply that with the continuing downturn in the real estate market in many areas, he's stuck with a house he's trying to sell at a loss - and can't because of all the foreclosed homes on the market. And when you're transfered, you need to sell your house, not refinance it.

While FHASecure is a good overall program, not everyone can avail themselves of it for a variety of reasons. FHASecure will still be there, but at least there's now another alternative which, while in and of itself is not perfect, is better than no other alternative. I think this one's aimed more at the people who are upside on their mortgage and where their banks won't help by writing a 2nd mortgage to cover the difference. Are there restrictions? Sure. But all I was trying to show is that something needs to be done to help stem to flow of red ink for everyone, and stabilize the market. And the more people who can be helped, the better, wouldn't you agree?