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President's new Housing stimulus plan

Just done watching the President's address in Arizona about the Housing plan. 275 Billion dollars in funds will be available very quickly, possibly in the next 2 weeks. Homeowners will be able to refinance their homes into lower interest rates that will make the mortgage payments down to 31% of their income.

I must say, I am a bit disappointed. There should have been provisions for principle home owners to be able to write off some of the current values of their homes.I know some will slam me on this, knowing that this is a huge cost to tax payers( me being one of them) but if we are going to bail out every possible industry, then there should have been something for people who continue to make payments on their homes, despite the fact that they are under water on the value of their homes.

Dishonesty has once again gotten away with its warped ways and it would have been nice to see the government ask for more from the banks who have been bailed out. My question is that the program seems vague in the sense that lenders who have received or need TARP money, will work with borrowers to refinance their homes into lower interest rates.What is these darned banks decide to do something else?? Why is it being left in the hands of irresponsible banks to make the decision that which homeowner bought outside their means?? Come on, give me a break !! It should be made mandatory for all banks to assist all their borrowers, whether in trouble or not, to modify their loans.

Stemming foreclosures- I don't think this program will achieve it. People who simply cannot afford to keep their homes due to:
Loss of huge amounts on the values of their homes.
Loss of jobs and income
How will reduced interest rates help those who have lost income and cannot keep up with the payments? Predatory lending practises that led to the neg am loans with home owners now facing a higher loan amount- is the housing bill addressing this issue? They should have stipulated in this restructuring to write down the accrued interest to bring the loan amount to the original amount borrowed and reduce the interest rate to make it more affordable to keep these people in their homes !

If people cannot make grocery bills are they going to be able to pay refinance costs?? Are the banks going to forego that cost or is the government going to bear the cost? I am a homeowner who wanted more help from the government.The banks are being offered help on a silver platter using our money, but the government could not use our taxpayer money to help us ease our pain?? I just do not get it.Is responsibilty being punished once again?

Posted by Rama Mehra Certified Pre Foreclosure Specialist on 02/18/2009 12:37 PM

Comments (12)

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Originally posted at: Windemere,San Ramon Blog: President's new Housing stimulus plan

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12 Comments on President's new Housing stimulus plan

FEB

There should have been provisions for principle home owners to be able to write off some of the current values of their homes.

The home owner can't "write down" their mortgage loan. Only the mortgage company can do that.

That is permitted in some of the regs. I haven't studied this yet. I don't expect much from it. As long as the lender has to agree to anything, the number of home owners who will be helped will be minimum.

We'll see.

I agree - we need to be able to help the home owners without asking the lender. Most lenders don't care!

Lenders don't care and why should we?? It is such a warped system that it angers me. People who do the right thing morally get the short end of the stick. I know of so many instances where people stop making payments on short sales and thes ehomes are either inhabited by owners or rented. People live in these homes for FREE while other people keep plugging away to do the right thing.

There is so much inventory in the market and we need to give incentives to current investors alongwith the first time home buyers to buy up these homes. Lets plough through these homes, NOW

FEB

I laughed at your last line "Is responsibilty being punished once again?". And that's exactly the way I feel with my tax money. We have made a responsible decision not to buy the house and get into this mortgage mess. The tax money, which should have been used to make public schools better, are being used to help people that made foolish decision in buying a house they cannot afford.

I totally agree with you. As for your comment on the "foolish decision in buying a house they cannot afford"- well I may have been one of the foolish people !! But the unfortunate part is that things are so costly in the Bay area, that there is no other way out !! One is making decent money and if you don't buy something, the IRS keeps slamming you on taxes!! So, the situation is that if you buy- you are screwed and if you don't- you are screwed nevertheless !! Choice is between the devil and the deep sea.

FEB

Hi Rama,

How about the real estate agents who keeps telling people to buy when they should have provided the honest opinion . I have seen even till few months back a realtor were saying now is the best time to buy when a common person can see what it coming . I think they should also be partly blamed for the current mess.

FEB

Realtors possess the knowledge to guide but none of us can predict what will happen in the future.Gosh, I feel guilty at times because there are people who bought homes from me a few months ago but even I cannot believe my eyes everyday when I see prices come down !! So, in the present circumstances, I know it is a fantastic time to buy now but then again, if the prices fall even more- then who will be to blame? Market conditions is something that is beyond any one's control but as a buyer, you have to make your own judgement. If you are interested in buying, then you will either jump into the fray at some point or else fear will take control.

I know it is a good time to buy but it has to fit in with your strategy to hold the investment; whether you can afford the home or not; what is your motivation to buy; do you need to buy because of your kids or simply the the IRS is eating up your income in taxes. etc etc..

When I sell homes, I consider it as my moral responsibility to inform my clients that the market may slide further and they have to make their own judgement, based on their individual needs. We call it a Market conditions advisory. You also have to understand, and maybe I will get myself kicked for saying this, but we too have to make a living !! So if we all start saying that don't buy or sell now- then who will feed our families? It may not be the perfect analogy, but its like buying a new car,Ipod or a new high tech cell phone- you know that after some time after the launch, that product will be selling for lesser money but if you want it NOW, then what difference does it make?

FEB

wow!. I like your comparision of a 800k house to a $200 ipod. Great thinking!

Yes, it definitely may sound unintelligent but I am talking about the psychology behind buying. And I did say it is not the best analogy and read the whole reply, not just one sentence from the reply !!

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